... of a sunk cost is the cost of advertising. Unlike things like machinery or transport, advertising cannot be bought again and again. Another example of a sunk cost would be the cost of food. When food is eaten there is no way that you can sell it again. Competitors would think again if they thought about the sunk costs because this is all money that they give but never in the long run get back. However, for something like advertising it is in a way benefiting the company because it is increasing people's awareness of the product, which leads to more profit. Sunk costs are mainly barriers to exit in a market, because if a company wants to exit an industry and thinks of how much money in the form of sunk costs has been spent, it is like an incentive to stay in the market. * Natural cost advantages: These ...

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