SSE/EFI Working Paper Series in Economics and Finance
What Fraction of a Capital Investment is Sunk Cost?
Abstract: In order to determine to what extent capital investments
are sunk costs this study deals with salvage values of discarded
metalworking machinery. Even though these assets are expected to be
non-specific many of the discarded assets are scrapped rather than sold on
second-hand markets. Econometric results suggests that firms can only
expect to get back 20-50 percent of the initial price for a "new" machine
once it is installed. The results also show differences in value-age
profiles across firms, but give only weak support for the hypothesis that
salvage values are particularly low in recessions.
Keywords: Sunk cost; second-hand market; salvage value; machine tools; (follow links to similar papers)
JEL-Codes: C24; D24; (follow links to similar papers)
27 pages, September 1995, Revised September 24, 1999
Before downloading any of the electronic versions below
you should read our statement on
for viewing Postscript files and the
Acrobat Reader for viewing and printing pdf files.
Full text versions of the paper:
hastef0068.pdf.zip (zipped) (93kB)
hastef0068.ps.zip PKZipped PostScript (89kB)
hastef0068.ps PostScript file (776kB)
Files with additional material for the paper:
hastef0068.fig2.xls Figure, Excel file (18kB)
- This paper is published as:
Asplund, Marcus, (2000), 'What Fraction of a Capital Investment is Sunk Cost?', Journal of Industrial Economics, Vol. XLVIII, September, pages 287-304
Questions (including download problems) about the papers in this series should be directed to Helena Lundin ()
Report other problems with accessing this service to Sune Karlsson ()
or Helena Lundin ().
Design by Joachim Ekebom