Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/79492
Authors: 
Nikiforos, Michalis
Year of Publication: 
2012
Series/Report no.: 
Working Paper, Levy Economics Institute 737
Abstract: 
This paper examines the endogeneity (or lack thereof) of the rate of capacity utilization in the long run at the firm level. We provide economic justification for the adjustment of the desired rate of utilization toward the actual rate on behalf of a cost-minimizing firm after examining the factors that determine the utilization of resources. The cost-minimizing firm has an incentive to increase the utilization of its capital if the rate of the returns to scale decreases as its production increases. The theory of economies of scale provides justification for this kind of behavior. In this manner, the desired rate of utilization becomes endogenous.
Subjects: 
Kaleckian
Long Run
Economies of Scale
Utilization
JEL: 
B20
B50
D21
E11
E12
E22
E25
Document Type: 
Working Paper

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