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The Normal Degree of Capacity Utilization: The History of a Controversial Concept

Author

Listed:
  • Trezzini, Attilio

    (Roma Tre University)

  • Pignalosa, Daria

    (Roma Tre University)

Abstract

The determination of the normal degree of capacity utilization has been addressed in the analysis of radically different problems and with different theoretical approaches. By going back over the history of these analyses, the paper highlights the main findings that have emerged from the early literature on the subject and identifies some generally shared principles on the one hand and different methodological positions on the other. Finally, attention is drawn to some issues that seem susceptible to further investigation.

Suggested Citation

  • Trezzini, Attilio & Pignalosa, Daria, 2021. "The Normal Degree of Capacity Utilization: The History of a Controversial Concept," Centro Sraffa Working Papers CSWP49, Centro di Ricerche e Documentazione "Piero Sraffa".
    • Handle: RePEc:ris:sraffa:0049
    as

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    References listed on IDEAS

    as
    1. Michalis Nikiforos, 2013. "The (Normal) Rate of Capacity Utilization at the Firm Level," Metroeconomica, Wiley Blackwell, vol. 64(3), pages 513-538, July.
    2. Jan Horst Keppler & Jérôme Lallement, 2006. "The Origins of the U-Shaped Average Cost Curve: Understanding the Complexities of the Modern Theory of the Firm," History of Political Economy, Duke University Press, vol. 38(4), pages 733-774, Winter.
    3. SMITH, Kenneth R., 1970. "Risk and the optimal utilization of capital," LIDAM Reprints CORE 52, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    4. Winston, Gordon C, 1974. "The Theory of Capital Utilization and Idleness," Journal of Economic Literature, American Economic Association, vol. 12(4), pages 1301-1320, December.
    5. Dilip B. Madan, 1987. "Optimal Duration and Speed in the Long Run," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 54(4), pages 695-700.
    6. Kurz,Heinz D. & Salvadori,Neri, 1997. "Theory of Production," Cambridge Books, Cambridge University Press, number 9780521588676, September.
    7. SMITH, Kenneth R., 1969. "The effect of uncertainty on monopoly price, capital stock and utilization of capital," LIDAM Reprints CORE 32, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    8. Gabriel Brondino & Andres Lazzarini, 2017. "Sraffa’s 1920s Critique and its Relevance for the Assessment of Mainstream Microeconomics," Research in the History of Economic Thought and Methodology, in: Including a Symposium on New Directions in Sraffa Scholarship, volume 35, pages 131-151, Emerald Group Publishing Limited.
    9. Attilio Trezzini & Antonella Palumbo, 2016. "The theory of output in the modern classical approach: main principles and controversial issues," Review of Keynesian Economics, Edward Elgar Publishing, vol. 4(4), pages 503-522, October.
    10. George Stigler, 1939. "Production and Distribution in the Short Run," Journal of Political Economy, University of Chicago Press, vol. 47(3), pages 305-305.
    11. Saverio M. Fratini, 2019. "On The Second Stage Of The Cambridge Capital Controversy," Journal of Economic Surveys, Wiley Blackwell, vol. 33(4), pages 1073-1093, September.
    12. Smith, Kenneth R., 1969. "The effect of uncertainty on monopoly price, capital stock and utilization of capital," Journal of Economic Theory, Elsevier, vol. 1(1), pages 48-59, June.
    13. Fiona Maclachlan, 2010. "Long-run and Short-run Cost Curves," Chapters, in: Mark Blaug & Peter Lloyd (ed.), Famous Figures and Diagrams in Economics, chapter 8, Edward Elgar Publishing.
    14. K J. W. Alexander & John Spraos, 1956. "Shift Working: An Application of the Theory of the Firm," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 70(4), pages 603-612.
    15. Richard A. Miller, 2000. "Ten Cheaper Spades: Production Theory and Cost Curves in the Short Run," The Journal of Economic Education, Taylor & Francis Journals, vol. 31(2), pages 119-130, June.
    16. repec:dau:papers:123456789/13724 is not listed on IDEAS
    17. Gordon C. Winston & Thomas O. McCoy, 1974. "Investment and the Optimal Idleness of Capital," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 41(3), pages 419-428.
    18. Kenneth R. Smith, 1970. "Risk and the Optimal Utilization of Capital," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 37(2), pages 253-259.
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    Cited by:

    1. Bassi, Federico & Bauermann, Tom & Lang, Dany & Setterfield, Mark, 2022. "Is capacity utilization variable in the long run? An agent-based sectoral approach to modeling hysteresis in the normal rate of capacity utilization," Structural Change and Economic Dynamics, Elsevier, vol. 63(C), pages 196-212.
    2. Zachary Knauss, 2024. "Exploring the Profit-Investment Puzzle: A Post-Keynesian Analysis of Market Concentration and Stagnation," Working Papers 2409, New School for Social Research, Department of Economics.
    3. Graham White, 2023. "Autonomous demand, expectations and calibration: simulating demand led growth," Working Papers 2023-08, University of Sydney, School of Economics.
    4. Trezzini, Attilio & Salvati, Luigi, 2024. "The dependence of growth on the profitability of capital in the Kaleckian literature: a critical evaluation," MPRA Paper 120163, University Library of Munich, Germany.
    5. Stamegna, Marco, 2022. "A Kaleckian growth model of secular stagnation with induced innovation," MPRA Paper 113794, University Library of Munich, Germany.

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    More about this item

    Keywords

    capacity utilization; choice of technique; demand-led growth; competition;
    All these keywords.

    JEL classification:

    • B51 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Socialist; Marxian; Sraffian
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory

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