Sunk Costs and Market Structure: Price Competition, Advertising, and the Evolution of Concentration

Rating:
Summary: Exogenous barriers to entry and market structure
Review: I studied this book in my first year of graduate school in economics in a course on Industrial Organization. I highly recommend this book. It is NOT a text book, it does not review the state of the art in I.O., it is Sutton's theory about market structure and concentration as shaped by EXOgenous barriers to entry.

I liked the book because it tries to explain market structure using OBSERVABLE variables, because it tests the theory both via case study and via econometric methods and because it is full of innovative ideas. I want to mention in particular the way in which Sutton tackles the problem of multiplicity of equilibria, what he calls "the bound approach"

A few months ago Sutton published a companion book called Technology and Market Structure in which he carries over the same line of research to endogenous barriers to entry.