Pat asks if I meant by fixed costs expenses, such as laying track or investing in research. The answer is yes. He suggests that entrepreneurs should factor in fixed costs before making their investment. The answer here, like most economic answers is yes and no. Before I explain further, recall that competitive pricing should mean that prices would go down to near marginal costs once the investment is sunk. As a result, competition and profitability would have trouble coexisting. In my book, I went to great lengths explaining that this thinking was central to the major American economists -- the same ones who founded the American Economic Association, including John Bates Clark. These economists wrote textbooks advocating competitive markets, but when they turn to the actual functioning of high fixed cost industries, such as the railroads, they advocated limits on competition to prevent universal bankruptcy. So the entrepreneur would do well to avoid industries with such a cost structure. Perhaps those who jump in, like the sort of anticipatory powers that Pat would attribute to entrepreneurs. Michael Perelman