ABSTRACT
This chapter aims to show that investors' perceptions of stranded assets could be reframed and theorised with stranding as a version of irreversible sunk costs. It offers a theoretical argument for the use of stranded assets as sunk costs frameworks in investment decision making, noting that much of the existing literature on the topic takes a more empiric approach. The chapter begins with developing the relationship and comparisons between stranded assets and sunk costs, arguing that stranded assets should be viewed as a mechanism through which costs of investment increase and become irreversible. It proposes a new spatial-temporal framework through which to view stranding risk in different geographies and time horizons, building on literatures pertaining to sunk costs, relational economic geography and behavioural finance. The chapter concludes with research propositions which sum up interactions between environmentally driven stranded assets and sunk costs and provide a baseline for future research.
