The (Normal) Rate of Capacity Utilization at the Firm Level

Abstract

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On the 'Utilization Controversy': A Theoretical and Empirical Discussion of the Kaleckian Model of Growth and Distribution

“…Nikiforos (2012) shows how this conclusion can be extended to a technology with more than one technique of production and an infinite continuum of techniques of production.…”

“…In general, as it becomes clear in the theory of utilization-among othersMarris (1964), Winston (1974), Betancourt and Clague (1981), Kurz (1986), Nikiforos (2012)-the level of the utilization of its capacity is one of the most important decisions for a firm, analogous to the choice of technique. It is hard to see why an entrepreneur will treat a decision of such importance for the profitability and the survival of its firm, merely as a convention.…”

“…In a recent paper Nikiforos (2012) argues that this conclusion can change if we take into account the role of the economies of scale in production. Assume that the production with the single shift system gives rise to some economies of scale vis-à-vis the double shift system.…”

“…From this point of view the utilization of capital is far from stationary. A recent paper (Nikiforos, 2012) shows that at the firm level, the desired utilization rate can become endogenous if we take into account the behavior of the returns to scale; the firm will tend to utilize its capital more as the output grows, if there are increasing returns to scale and the rate of the returns to scale decreases. In the present paper we show how this micro behavior can be compatible with an endogenous desired utilization rate at the macro level.…”

Growth with Unused Capacity and Endogenous Depreciation

“…Lavoie (1995Lavoie ( , 1996 and Dutt (1997) introduce the notion of expected rate of growth and argue that, in such a way, it is possible to ensure a stable long-period equilibrium solution. Nikiforos (2012bNikiforos ( , 2012a criticizes these positions and proposes his own explanation of the endogeneity of the normal degree of utilization, which is based on the assumption of returns to scale that increase at a diminishing rate.…”