Do Firms Always Choose Excess Capacity?

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.

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Year of publication:	2004-01-15
Authors:	Ogawa, Hikaru ; Nishimori, Akira
Published in:	Economics Bulletin. - AccessEcon, ISSN 1545-2921. - Vol. 12.2004, 2, p. 1-7
Publisher:	AccessEcon

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Extent:	application/pdf
Type of publication:	Article
Classification:	L3 - Nonprofit Organizations and Public Enterprise ; L1 - Market Structure, Firm Strategy, and Market Performance
Source:	RePEc - Research Papers in Economics

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