Excess Capacity
Bibliographic Data
| ID | 23600445 |
|---|---|
| Authors | Stephanos Avgeropoulos (Europe for Business), Adrián A Caldart (AESE Business School) |
| Year | 2015 |
| Pages | 1-2 |
| Publication date | 2015-01-22 |
| Open Access | Yes |
| Type | CHAPTER |
| Venue | Wiley Encyclopedia of Management (SOURCE_BOOK) |
| Publisher | Wiley (PUBLISHER • GB) |
| DOI | 10.1002/9781118785317.weom120002 |
| OpenAlex | W4234202633 |
| ISBN | 9781118785317 |
| Language | EN |
| References cited | 5 |
A firm is said to have excess capacity when it has production capacity available for use which is more than sufficient to satisfy current demand. This can either be due to market imperfections, or it can be pursued for strategic purposes, to improve a firm's competitive standing. As far as the former family of causes is concerned, excess capacity is a result of the absence of a market mechanism which balances demand and supply in the short run. Risk of overcapacity is specially serious in cyclical industries (in which optimistic expectations during upturns almost guarantee the creation of overcapacity) and in those with undifferentiated products as competition is based essentially on cost and cost benefits from high volume (i.e.: capacity) and new technology (i.e., building new modern capacity).
Business · Capacity utilization · Competition (biology) · Economics · Excess supply · Industrial organization · Microeconomics · Production (economics) · Supply and demand · Economic theories and models · Merger and Competition Analysis · Supply Chain and Inventory Management
| Highly cited | No |
|---|