I'm not sure how to answer Pat's question.  I confess that I do not understand what a 
"fixed cost function" is.

Pat also suggests that my analysis is static.  Opening the story to dynamic analysis 
makes my position stronger.  During the late 19th century when this literature was at 
its peak, technical change was very rapid.  Carnegie once had a factory torn down 
when it was only a few months old.

Rapid technological change means that sunk costs are even more at risk.

Pat wonders why rational entrepreneurs would be hesitant to invest in industries with 
such a cost structure.  In a dynamic, competitive world, prices are likely to fall 
below marginal costs to future marginal costs that take advantage of new technology.  
A rational entrepreneur would invest if he or she thought they could get first mover 
advantages -- selling at far above marginal costs -- before others could move in.  
But in a very dynamic economy, such a window of opportunity may not be open long 
enough to recoup costs.

Michael Perelman