Is There Excess Capacity Really?

Preprint

Excess capacity is viewed as a distinctive feature and an essential inefficiency of monopolistic competition as the large-group case of imperfect competition. Using a simple geometrical approach and studying the demand and cost curves faced by the individual firm, we find that there is little potential for excess capacity in monopolistically competitive markets, opposite to the common perception and wide coverage in the literature. We see monopolistic competition as the true type of competition in the presence of transaction costs where perfect competition is a hypothetical and ideal benchmark which cannot exist under positive transaction costs.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Journal: Theoretical and Practical Research in Economic Fields ; ISSN: 2068–7710 ; Volume: 6 ; Issue: 2 (12) (Winter) ; Pages: 127-143

Classification and Topics

• Classification: Wirtschaft ; Organizational Behavior; Transaction Costs; Property Rights ; Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity ; Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection ; Oligopoly and Other Imperfect Markets
• Subject: excess capacity ; monopolistic competition ; oligopoly ; transaction costs

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Todorova, Tamara
• Event: Veröffentlichung
• (who): ASERS Publishing
• (where): s.l.
• (when): 2015

Further information

• Handle: http://hdl.handle.net/10419/157217
• Last update: 10.03.2025, 11:43 AM CET