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On the Measurement of Capacity Utilization

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Author Info
Nelson, Randy A
Abstract

Capacity utilization is usually defined as the ratio of actual output to the output corresponding to (1) the minimum point on the short-run average total cost curve, and (2) the point of tangency between the long-run average total cost and short-run average total cost curves. In practice, however, capacity utilization is often measured as the ratio of actual to the maximum potential output consistent with a given capital stock. This paper demonstrates how to estimate the theoretical measures of capacity utilization, and examines the correlation between three measures of capacity utilization, and the McGraw-Hill estimates of capacity utilization, using data from a sample of U.S. privately-owned electric utilities for 1961-83. Copyright 1989 by Blackwell Publishing Ltd.

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Publisher Info
Article provided by Blackwell Publishing in its journal Journal of Industrial Economics.

Volume (Year): 37 (1989)
Issue (Month): 3 (March)
Pages: 273-86
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Handle: RePEc:bla:jindec:v:37:y:1989:i:3:p:273-86

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Web page: http://www.blackwellpublishing.com/journal.asp?ref=0022-1821

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  1. Itziar Lazkano, 2008. "Cost Structure and Capacity Utilisation in Multi-product Industries: An Application to the Basque Trawl Industry," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 41(2), pages 189-207, October. [Downloadable!] (restricted)
  2. James Kirkley & Catherine Morrison Paul & Dale Squires, 2002. "Capacity and Capacity Utilization in Common-pool Resource Industries," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 22(1), pages 71-97, June. [Downloadable!] (restricted)
  3. Hoff, Ayoe & Frost, Hans, 2007. "Optimal Vessel Quotas and Capacity of a Danish Trawler Fleet Segment: A Dual Approach," Marine Resource Economics, Marine Resources Foundation, vol. 22(1). [Downloadable!]
  4. Vestergaard, Niels & Squires, Dale & Kerstens, Kristiaan, 2005. "Methodological Reflections on the Short-Run Johansen Industry Model in Relation to Capacity Management," Marine Resource Economics, Marine Resources Foundation, vol. 20(4). [Downloadable!]
  5. Tingley, Diana & Pascoe, Sean, 2005. "Eliminating Excess Capacity: Implications for the Scottish Fishing Industry," Marine Resource Economics, Marine Resources Foundation, vol. 20(4). [Downloadable!]
  6. Walter Briec & Kristiaan Kerstens & Diego Prior, 2009. "Tangency Capacity Notions Based upon the Pro?t and Cost Functions: A Non-Parametric Approach and a Comparison," Working Papers 2009-ECO-05, IESEG School of Management. [Downloadable!]
  7. James Kirkley & Dale Squires, 1999. "Capacity and Capacity Utilization in Fishing Industries," University of California at San Diego, Economics Working Paper Series 1999-16, Department of Economics, UC San Diego. [Downloadable!]
  8. James Kirkley & Dale Squires, 1999. "Capacity and Capacity Utilization in Fishing Industries," University of California at San Diego, Economics Working Paper Series 99-16, Department of Economics, UC San Diego. [Downloadable!]
  9. E. Abdul Azeez, 2002. "Economic reforms and industrial performance: An analysis of capacity utilisation in Indian manufacturing," Centre for Development Studies, Trivendrum Working Papers 334, Centre for Development Studies, Trivendrum, India. [Downloadable!]
  10. Roberto Fazioli & Massimo Filippini, 1997. "Cost Structure and Product Mix of Local Public Theatres," Journal of Cultural Economics, Springer, vol. 21(1), pages 77-86, March. [Downloadable!] (restricted)
  11. Gary Ferrier & Hervé Leleu & Vivian Valdmanis, 2009. "Hospital capacity in large urban areas: is there enough in times of need?," Journal of Productivity Analysis, Springer, vol. 32(2), pages 103-117, October. [Downloadable!] (restricted)
  12. Subhash C. Ray & Kankana Mukherjee & Yanna Wu, 2005. "Direct and Indirect Measures of Capacity Utilization: A Nonparametric Analysis of U.S. Manufacturing," Working papers 2005-36, University of Connecticut, Department of Economics. [Downloadable!]
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