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

    as
    1. Dixit, Avinash, 1980. "The Role of Investment in Entry-Deterrence," Economic Journal, Royal Economic Society, vol. 90(357), pages 95-106, March.
    2. 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.
    3. Pal, Debashis, 1998. "Endogenous timing in a mixed oligopoly," Economics Letters, Elsevier, vol. 61(2), pages 181-185, November.
    4. repec:bla:ecorec:v:77:y:2001:i:238:p:283-90 is not listed on IDEAS
    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. 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.
    7. 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.
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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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