Opportunity and Sunk Costs

  • Lester D. Taylor

Abstract

In the preceding chapter, it was noted how the view that capital is stored (or embedded) labor can lead to problems in interpreting depreciation and whether or not depreciation is a component of long-run marginal cost. In this chapter, we shall look at some related questions involving opportunity costs and sunk costs, especially as they relate to costing and pricing issues in the regulated industries. The focus for the discussion will be questions raised by Richard Emmerson in a paper in a recent volume on marginal cost techniques in the telephone industry sponsored by the National Regulatory Research Institute.1

Keywords

Opportunity Cost Capital Cost Physical Capital Power Supply System Spot Market 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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Copyright information

© Springer Science+Business Media New York 2000

Authors and Affiliations

  • Lester D. Taylor
    • 1
  1. 1.University of ArizonaWilsonUSA

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