15. sunk cost and bidding Return to the bidding story in the text, but now assume α = 1, 000 and β = γ = 10. We will also now interpret the αx term as a type of design cost that must be incurred before the bidding takes place. So at the time of bidding the αx term is a sunk cost; the firms incurred this cost before submitting their bids. What are the equilibrium bidding strategies? Of course, the firms would not have done this initial design work, and incurred the αx cost, had they looked ahead to the bidding exercise. What might the buying firm do in this instance in order to ensure a supply of bidders?