Capacity Utilization in Indian Paper Industry
AbstractThe study estimates the rate of capacity utilization for the Indian paper industry for the period 1973-74 to 1997-98 on the basis of the theoretical framework of variable cost function. It is based on the basic premise that deviation from full utilization of capacity takes place as the levels of certain inputs, particularly capital, are fixed in the short-run and thus can be changed only in the long-run. In order to meet the increase (decrease) in demand, the industry puts the existing capital to more (less) intensive use. The study undertakes empirical estimation of a translog variable cost function by considering three variable inputs, viz., labour, energy and raw material and one quasi-fixed input, capital, on the basis of aggregate industry level data taken from annual survey of industries. It is found that under- utilization of capacity prevails in the Indian paper industry and there has been a decline in the rate of capacity utilization over time.
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Bibliographic InfoPaper provided by EconWPA in its series Microeconomics with number 0503001.
Length: 20 pages
Date of creation: 01 Mar 2005
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economic capacity utilization; equilibrium capital stock; Indian paper industry; temporary equilibrium; translog variable cost function;
Find related papers by JEL classification:
- D2 - Microeconomics - - Production and Organizations
- L6 - Industrial Organization - - Industry Studies: Manufacturing
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-04-16 (All new papers)
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