Abstract
In a wide sense, the concept of “fixed investment” refers not only to investment in physical capital but also to expenses directed to other intangible assets such as high qualified labor, R&D, the acquisition of particular knowledge about markets or consumers’ behavior, advertising, etc. Fixed investment is directly connected with the fixed cost of production of a firm, which is independent of the evolution of output by definition. The consequent emergence of economies of scale and the consideration of irreversible fixed costs (sunk costs) as a strategic variable for market competition (barriers to entry) have led to the development of new theories in the fields of Law and Economics, International Trade or Industrial Organization.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
References
Baldwin R, Krugman PR (1989) Persistent trade effects of large exchange rate shocks. Q J Econ 104:635–654
Dixit A (1989) Hysteresis, import penetration, and exchange rate pass-through. Q J Econ 104:205–228
García-Herrera A, Llorca-Vivero R (2010) How time influences franchise contracts: the Spanish case. Eur J Law Econ 30:1–16
Guriev S, Kvassov D (2005) Contracting on time. Am Econ Rev 96:1369–1385
Krugman PR (1979) Increasing returns, monopolistic competition and international trade. J Int Econ 9:469–479
Krugman PR (1980) Scale economies, product differentiation, and the pattern of trade. Am Econ Rev 70:950–959
Melitz MJ (2003) The impact of trade on intra-industry reallocations and aggregate industry productivity. Econometrica 71:1695–1725
Roberts MJ, Tybout JR (1997) The decision to export in Colombia: an empirical model of entry with sunk costs. Am Econ Rev 87:545–564
Shaked A, Sutton J (1983) Natural oligopolies. Econometrica 51:1469–1484
Shaked A, Sutton J (1987) Product differentiation and industrial structure. J Ind Econ 36:131–146
Sutton J (1991) Sunk Costs and market structure: price competition, advertising, and the evolution of concentration. MIT Press, Cambridge, MA
Author information
Authors and Affiliations
Corresponding author
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2019 Springer Science+Business Media, LLC, part of Springer Nature
About this entry
Cite this entry
Llorca-Vivero, R. (2019). Fixed Investment. In: Marciano, A., Ramello, G.B. (eds) Encyclopedia of Law and Economics. Springer, New York, NY. https://doi.org/10.1007/978-1-4614-7753-2_177
Download citation
DOI: https://doi.org/10.1007/978-1-4614-7753-2_177
Published:
Publisher Name: Springer, New York, NY
Print ISBN: 978-1-4614-7752-5
Online ISBN: 978-1-4614-7753-2
eBook Packages: Economics and FinanceReference Module Humanities and Social SciencesReference Module Business, Economics and Social Sciences