Re: Sunk Costs and Nike and Captialism

[GSKILLMAN@xxxxxxxxxxxx]

Larry Shute writes:

> The classic work on sunk costs is John Maurice Clark's The Economics of
> Overhead Costs published in 1923.  I wish more people would read the
> book, ignoring the mild tone.  In my HO it's one of the seminal books
> of this century.  Clark clearly points out the "discovery" of overhead
> costs and the implications that this has for the MC=MR type of thinking.
> Among his bon mots: "Discrimination is the secret of efficiency" -- with
> respect to using the overhead that modern capitalism builds.  As Clark
> points out, his book is about unused capacity -- waste.  Capacity which
> capitalism can never use.

No disagreement that capitalism is wasteful, but I didn't think that
overhead costs had *any* particular implications "for the MC=MR type
of thinking."  For instance, even with overhead costs, profit-
maximizing price discrimination typically implies MR = MC conditions.

Gil [gskillman@xxxxxxxxxxxxxxxxxx]
  > --
> Laurence Shute
> Department of Economics
> California State Polytechnic University, Pomona
> Tel: (909) 869-3850
> Internet: LSHUTE@xxxxxxxxxxxxx
>
>