Some Theoretical Issues in the Measurement of Capacity

Klein, Lawrence R.

doi:10.2307/1907721

Cited by 163 publications

(79 citation statements)

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“…In the short-run, capital is fixed and only the variable inputs can be varied. Hickman (1964) defined economic capacity of a firm as that output level at which the short run average total cost curve is at its minimum; while Klein (1960) and Friedman (1963) defined economic capacity as the output level at which the long-run and short-run average total cost curves are tangent.…”

Section: The Concept Of Economic Capacitymentioning

confidence: 99%

“…The relationship between capacity utilization rate of a firm and exogenous factors is found in Klein and Preston (1967) capital utilization model. In the model, they assume that; (4) Where, and are desired capital and manpower levels, while K t and L t are actual level of capital and manpower respectively.…”

Section: Klein Capital Utilization Modelmentioning

confidence: 99%

“…They also relate firm's output gap to manpower change as thus; (5) Where Y t is the actual output and Y f t is the full employment level of output. Combining Equation (4) and (5) (6) Where the firm output gap, represents the capacity utilization rate at period "t" (Klein and Preston, 1967;Johansen, 1968). Attaching log to both side of the equations and assuming Cobb-Douglas production function;…”

Section: Klein Capital Utilization Modelmentioning

confidence: 99%

See 2 more Smart Citations

Analysis of economic capacity utilization in the Nigerian sugar industry (1970 - 2010)

Akpan¹,

Patrick²,

John³

et al. 2013

J. Dev. Agric. Econ.

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The study analyzed economic capacity utilization rates in the sugar industry for the period 1970 to 2010 in Nigeria. Secondary data obtained from sugar firms; Central Bank of Nigeria; National Bureau of Statistics and the Federal Ministry of Finance were used in the study. Stochastic Cobb-Douglas cost functions for the sugar industry were estimated from which indices of economic capacity utilization rates were obtained. Trend in the economic capacity utilization rate showed undulated pattern with an average index of 60.30% and excess economic capacity of 39.70%. Multiple-regression of various forms based on the ordinary least squares technique was used to determine factors that influence the performance indicators in the industry. Empirical results revealed that economic capacity utilization rates in the sugar industry was influenced by the inflation rate, per capita real GDP, energy consumption of the industry, federal government expenditure on the sugar industry and the period of liberalization. The result of the regression and descriptive analyses revealed that the sugar industry in Nigeria was constrained by insufficient production inputs. Policy measures aimed at reduction or maintaining a steady or less fluctuated inflation rate in the country, expansionary aggregate demand, increase funding to agencies that have direct dealings with the sugar production and adequate provision of electricity to the industry as well as the adoption of the liberalization industrial policy on sugar industry were recommended.

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Section: The Concept Of Economic Capacitymentioning

confidence: 99%

Section: Klein Capital Utilization Modelmentioning

confidence: 99%

Section: Klein Capital Utilization Modelmentioning

confidence: 99%

See 1 more Smart Citation

Analysis of economic capacity utilization in the Nigerian sugar industry (1970 - 2010)

Akpan¹,

Patrick²,

John³

et al. 2013

J. Dev. Agric. Econ.

View full text Add to dashboard Cite

show abstract

“…Klein defined capacity as the maximum sustainable level of output an industry can attain within a very short time, when not constrained by the demand for product and the industry is operating its existing stock of capital at its customary level of intensity. Klein (1960) argued that long run average cost curve may not have a minimum and proposed the output level where the short run average cost curve is tangent to the long run average cost curve as an alternative measure of capacity output. This is also the approach adopted by Berndt and Morrison (1981).…”

Section: Concept Of Capacitymentioning

confidence: 99%

Measuring Capacity Utilization and Evaluating the Impact of Liberalization on Capacity Utilization of Indian Drug and Pharmaceutical Industry

Ray¹

2011

Journal of Emerging Knowledge on Emerging Markets

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“…The first was suggested by Klein (1960) and Friedman (1963) and more recently by Segerson & Squires (1990) who define the potential output as being the output level at which the long-run and short-run average total cost curves are tangent. The second approach supported by Cassels (1937) and Hickman (1964) takes as reference the output level at which the short-run average total cost curve reaches its minimum.…”

Section: Brief Review Of the Literature On Capacity Utilisationmentioning

confidence: 99%

On the measurement of capacity utilisation and coast efficiency: a non-parametric approach at firm level

Prior

Filimon

2002

Pesqui. Oper.

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In this paper we evaluate the inefficiency generated by an inadequate structure of the fixed inputs and by the difficulty to adjust them in the short-run in a sample of Romanian firms in the chemical industry over the period 1996-1997. We use Data Envelopment Analysis (DEA) and apply this methodology in an innovative setting using a cost analysis instead of the technical efficiency approach. The results show inefficiency in most of the cases due to a low degree of capacity utilisation.

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Some Theoretical Issues in the Measurement of Capacity

Cited by 163 publications

References 0 publications

Analysis of economic capacity utilization in the Nigerian sugar industry (1970 - 2010)

Analysis of economic capacity utilization in the Nigerian sugar industry (1970 - 2010)

Measuring Capacity Utilization and Evaluating the Impact of Liberalization on Capacity Utilization of Indian Drug and Pharmaceutical Industry

On the measurement of capacity utilisation and coast efficiency: a non-parametric approach at firm level

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