Sunk Costs and Re-Emerging Costs

Economic theory starts from the assumption that incremental costs alone influence the behaviour of consumers. Sunk costs are supposed to be irrelevant. Incremental costs are those costs which must be borne as a result of a given decision or action but not otherwise. Sunk costs on the other hand are those costs which have already been borne but which can no longer be recovered. Goods and services which have been bought but which can no longer be sold second-hand constitute a straightforward sunk cost corresponding to the original purchase price.