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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
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    File URL: http://www.accessecon.com/pubs/EB/2004/Volume12/EB-04L30001A.pdf
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    References listed on IDEAS

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    1. Shoji Haruna, 1996. "A Note on Holding Excess Capacity to Deter Entry in a Labour-Managed Industry," Canadian Journal of Economics, Canadian Economics Association, vol. 29(2), pages 493-499, May.
    2. Dixit, Avinash, 1980. "The Role of Investment in Entry-Deterrence," Economic Journal, Royal Economic Society, vol. 90(357), pages 95-106, March.
    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.
    5. Lorenz NETT, 1993. "Mixed Oligopoly With Homogeneous Goods," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 64(3), pages 367-393, July.
    6. Junsen Zhang, 1993. "Holding Excess Capacity to Deter Entry in a Labour-Managed Industry," Canadian Journal of Economics, Canadian Economics Association, vol. 26(1), pages 222-234, February.
    7. Richard G. Harris & Elmer G. Wiens, 1980. "Government Enterprise: An Instrument for the Internal Regulation of Industry," Canadian Journal of Economics, Canadian Economics Association, vol. 13(1), pages 125-132, February.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Dong, Quan & Bárcena-Ruiz, Juan Carlos, 2015. "Does investment in capacity encourage FDI?," Economic Modelling, Elsevier, vol. 51(C), pages 58-64.
    2. repec:ebl:ecbull:v:12:y:2007:i:26:p:1-7 is not listed on IDEAS
    3. Jorge Fernández-Ruiz, 2012. "Capacity choice in a mixed duopoly with a foreign competitor," Economics Bulletin, AccessEcon, vol. 32(3), pages 2653-2661.
    4. Lu, Yuanzhu & Poddar, Sougata, 2005. "Mixed oligopoly and the choice of capacity," Research in Economics, Elsevier, vol. 59(4), pages 365-374, December.
    5. Hikaru Ogawa, 2006. "Capacity Choice in the Mixed duopoly with Product Differentiation," Economics Bulletin, AccessEcon, vol. 12(8), pages 1-6.
    6. Luciano Fanti & Nicola Meccheri, 2014. "Capacity Choice and Welfare under Alternative Unionisation Structures," Working Paper series 12_14, Rimini Centre for Economic Analysis.
    7. repec:bla:manchs:v:85:y:2017:i:6:p:661-681 is not listed on IDEAS
    8. Yuanzhu Lu & Sougata Poddar, 2009. "Endogenous Timing In A Mixed Duopoly And Private Duopoly -'Capacity-Then-Quantity' Game: The Linear Demand Case ," Australian Economic Papers, Wiley Blackwell, vol. 48(2), pages 138-150, June.
    9. Kazuhiro Ohnishi, 2014. "Sequential Mixed Competition with a Foreign Joint-stock Firm," International Journal of Social Sciences and Management Studies (IJSSMS), The Economics and Social Development Organization (TESDO), vol. 1(2), pages 38-52, June.
    10. Yasuo Sanjo, 2009. "Quality choice in a health care market: a mixed duopoly approach," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 10(2), pages 207-215, May.
    11. Juan Carlos Bárcena-Ruiz & Maria Begoña Garzón, 2010. "Endogenous Timing In A Mixed Duopoly With Capacity Choice," Manchester School, University of Manchester, vol. 78(2), pages 93-109, March.
    12. Kazuhiro Ohnishi, 2013. "A Two-production-period Model with State-owned and Labour-managed Firms," Institutions and Economies (formerly known as International Journal of Institutions and Economies), Faculty of Economics and Administration, University of Malaya, vol. 5(1), pages 41-56, April.
    13. Yuanzhu Lu & Sougata Poddar, 2006. "Endogenous Timing in a Mixed Duopoly and Private Duopoly - ‘Capacity- then-Quantity’ Game," Departmental Working Papers wp0605, National University of Singapore, Department of Economics.
    14. Juan Carlos Barcena-Ruiz & María Begoña Garzón, 2007. "Capacity Choice in a Mixed Duopoly under Price Competition," Economics Bulletin, AccessEcon, vol. 12(26), pages 1-7.
    15. Chen, Yi-Wen & Yang, Ya-Po & Wang, Leonard F.S. & Wu, Shih-Jye, 2014. "Technology licensing in mixed oligopoly," International Review of Economics & Finance, Elsevier, vol. 31(C), pages 193-204.
    16. Yoshihiro Tomaru & Yasuhiko Nakamura & Masayuki Saito, 2009. "Capacity Choice in a Mixed Duopoly with Managerial Delegation," Economics Bulletin, AccessEcon, vol. 29(3), pages 1904-1924.
    17. Hikaru Ogawa & Ming Hsin Lin, 2005. "Cost reducing incentives in a mixed duopoly market," Economics Bulletin, AccessEcon, vol. 12(6), pages 1-6.

    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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