IDEAS home Printed from https://ideas.repec.org/a/srs/jtpref/v6y2015i2p128-144.html
   My bibliography  Save this article

Is There Excess Capacity Really?

Author

Listed:
  • Tamara TODOROVA

    (Department of Economics American University in Bulgaria, Bulgaria)

Abstract

Excess capacity is viewed as a distinctive feature and an essential inefficiency of monopolistic competition as the large-group case of imperfect competition. Using a simple geometrical approach and studying the demand and cost curves faced by the individual firm, we find that there is little potential for excess capacity in monopolistically competitive markets, opposite to the common perception and wide coverage in the literature. We see monopolistic competition as the true type of competition in the presence of transaction costs where perfect competition is a hypothetical and ideal benchmark which cannot exist under positive transaction costs.

Suggested Citation

  • Tamara TODOROVA, 2015. "Is There Excess Capacity Really?," Theoretical and Practical Research in the Economic Fields, ASERS Publishing, vol. 6(2), pages 128-144.
    • Handle: RePEc:srs:jtpref:v:6:y:2015:i:2:p:128-144
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Demsetz, Harold, 1982. "Barriers to Entry," American Economic Review, American Economic Association, vol. 72(1), pages 47-57, March.
    2. Demsetz, Harold, 1972. "The Inconsistencies in Monopolistic Competition: A Reply," Journal of Political Economy, University of Chicago Press, vol. 80(3), pages 592-597, May-June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Samidh Pal, 2023. "Causes of Excess Capacity," Papers 2304.02137, arXiv.org.
    2. Dale Squires & Kathleen Segerson, 2022. "Capacity and Capacity Utilization in Production Economics," Springer Books, in: Subhash C. Ray & Robert G. Chambers & Subal C. Kumbhakar (ed.), Handbook of Production Economics, chapter 24, pages 1001-1037, Springer.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Raymond J. March & Adam G. Martin & Audrey Redford, 2016. "The substance of entrepreneurship and the entrepreneurship of substances," Journal of Entrepreneurship and Public Policy, Emerald Group Publishing Limited, vol. 5(2), pages 201-220, August.
    2. Stratmann, Thomas, 2005. "Ballot access restrictions and candidate entry in elections," European Journal of Political Economy, Elsevier, vol. 21(1), pages 59-71, March.
    3. Paul H. Jensen & Robin E. Stonecash, 2004. "The Efficiency of Public Sector Outsourcing Contracts: A Literature Review," Melbourne Institute Working Paper Series wp2004n29, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    4. Giammario Impullitti & Syed Kazmi, 2022. "Globalization and market power," CEP Discussion Papers dp1866, Centre for Economic Performance, LSE.
    5. Parizek, Michal & Stephen, Matthew D., 2021. "The long march through the institutions: Emerging powers and the staffing of international organizations," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 56(2), pages 204-223.
    6. Tamara TODOROVA, 2021. "Some Efficiency Aspects of Monopolistic Competition: Innovation, Variety and Transaction Costs," Theoretical and Practical Research in the Economic Fields, ASERS Publishing, vol. 12(2), pages 82-88.
    7. Bagwell, Kyle, 1990. "Informational product differentiation as a barrier to entry," International Journal of Industrial Organization, Elsevier, vol. 8(2), pages 207-223, June.
    8. John Lott, 1986. "Brand names and barriers to entry in political markets," Public Choice, Springer, vol. 51(1), pages 87-92, January.
    9. Karuna, Christo, 2007. "Industry product market competition and managerial incentives," Journal of Accounting and Economics, Elsevier, vol. 43(2-3), pages 275-297, July.
    10. Price, Gregory N., 1995. "The determinants of entry for black-owned commercial banks," The Quarterly Review of Economics and Finance, Elsevier, vol. 35(3), pages 289-303.
    11. Jedlicka, Lorenz & Jumah, Adusei, 2006. "The Austrian Insurance Industry: A Structure, Conduct and Performance Analysis," Economics Series 189, Institute for Advanced Studies.
    12. Ewa Balcerowicz & Oleg Ustenko, 2006. "Regulatory Policy in Ukraine: Current State and What Should be Done to Improve the Business Environment," CASE Network Studies and Analyses 0324, CASE-Center for Social and Economic Research.
    13. Lambie, Neil Ross, 2009. "The role of real options analysis in the design of a greenhouse gas emissions trading scheme," 2009 Conference (53rd), February 11-13, 2009, Cairns, Australia 47626, Australian Agricultural and Resource Economics Society.
    14. Park, Namgyoo K. & Cho, Dong-Sung, 1997. "The effect of strategic alliance on performance," Journal of Air Transport Management, Elsevier, vol. 3(3), pages 155-164.
    15. André Laplume & Kent Walker & Zhou Zhang & Xin Yu, 2021. "Incumbent Stakeholder Management Performance and New Entry," Journal of Business Ethics, Springer, vol. 174(3), pages 629-644, December.
    16. Christian Bjørnskov & Nicolai Foss, 2010. "Economic Freedom and Entrepreneurial Activity: Some Cross-Country Evidence," Springer Books, in: Andreas Freytag & Roy Thurik (ed.), Entrepreneurship and Culture, chapter 0, pages 201-225, Springer.
    17. Benjamin HUYBRECHTS & Sybille MERTENS, 2014. "The Relevance Of The Cooperative Model In The Field Of Renewable Energy," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 85(2), pages 193-212, June.
    18. Nicolaï Foss & Nils Stieglitz, 2012. "Modern Resource-based Theory(ies)," Chapters, in: Michael Dietrich & Jackie Krafft (ed.), Handbook on the Economics and Theory of the Firm, chapter 20, Edward Elgar Publishing.
    19. M. Suresh Babu, 2002. "Economic reforms and entry barriers in Indian manufacturing," Centre for Development Studies, Trivendrum Working Papers 331, Centre for Development Studies, Trivendrum, India.
    20. Dawn Gregg & Madhavan Parthasarathy, 2017. "Factors affecting the long-term survival of eBay ventures: a longitudinal study," Small Business Economics, Springer, vol. 49(2), pages 405-419, August.

    More about this item

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:srs:jtpref:v:6:y:2015:i:2:p:128-144. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Claudiu Popirlan (email available below). General contact details of provider: http://journals.aserspublishing.eu/tpref .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.