hit-and-run entry

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Entry to a market in the expectation of making an immediate profit, possibly followed by withdrawal. This can occur only if the entrant does not incur sunk costs. If there are sunk costs entry will be profitable only if the entrant expects to stay in the market long enough to recoup them. Absence of sunk costs is probable only through economies of scope: firms with skills or facilities which can be put to a variety of uses can afford hit-and-run entry to a particular market.

Subjects: Economics.

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