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Do Firms Always Choose Excess Capacity?

Author

Listed:
  • Hikaru Ogawa

    (Nagoya University)

  • Akira Nishimori

    (Aichi University)

Abstract

We analyze the capacity choice of firms in a long-run mixed oligopoly market, in which firms decide not only production quantity but also capacity scale. Our main purpose is to show that while a profit-maximizing firm maintains over capacity as a strategic device, a firm pursuing non-pure profit chooses under capacity.

Suggested Citation

  • Hikaru Ogawa & Akira Nishimori, 2004. "Do Firms Always Choose Excess Capacity?," Economics Bulletin, AccessEcon, vol. 12(2), pages 1-7.
    • Handle: RePEc:ebl:ecbull:eb-04l30001
    as

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    References listed on IDEAS

    as
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    3. Pal, Debashis, 1998. "Endogenous timing in a mixed oligopoly," Economics Letters, Elsevier, vol. 61(2), pages 181-185, November.
    4. Wen, Mei & Sasaki, Dan, 2001. "Would Excess Capacity in Public Firms Be Socially Optimal?," The Economic Record, The Economic Society of Australia, vol. 77(238), pages 283-290, September.
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    More about this item

    JEL classification:

    • L3 - Industrial Organization - - Nonprofit Organizations and Public Enterprise
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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