You are here:
| Reference : Capacity utilisation and profitability: A decomposition of short-run profit efficiency |
| Scientific journals : Article | |||
| Business & economic sciences : Economic systems & public economics | |||
| http://hdl.handle.net/2268/30593 | |||
| Capacity utilisation and profitability: A decomposition of short-run profit efficiency | |
| English | |
| Coelli, Tim [ > > ] | |
| Grifell-Tatjé, Emili [ > > ] | |
Perelman, Sergio  [Université de Liège - ULg > HEC-Ecole de gestion de l'ULg : UER > Economie publique appliquée >] | |
| 2002 | |
| International Journal of Production Economics | |
| Elsevier Science | |
| 79 | |
| 261-278 | |
| International | |
| 0925-5273 | |
| Amsterdam | |
| The Netherlands | |
| [en] Capacity Utilisation ; Profit decomposition ; Profitability ; Technical Efficiency ; Allocative Efficiency | |
| [en] The principal aim of this paper is to measure the amount by which the profit of a multi-input, multi-output firm
deviates from maximum short-run profit, and then to decompose this profit gap into components that are of practical use to managers. In particular, our interest is in the measurement of the contribution of unused capacity, along with measures of technical inefficiency, and allocative inefficiency, in this profit gap. We survey existing definitions of capacity and, after discussing their shortcomings, we propose a new ray economic capacity measure that involves shortrun profit maximisation, with the output mix held constant. We go on to describe how the gap between observed profit and maximum profit can be calculated and decomposed using linear programming methods. The paper concludes with an empirical illustration, involving data on 28 international airline companies. The empirical results indicate that these airline companies achieve profit levels which are on average US$815m below potential levels, and that 70% of the gap may be attributed to unused capacity. | |
| Centre de Recherche en Économie Publique et de la Population - C.R.E.P.P | |
| http://hdl.handle.net/2268/30593 |
| File(s) associated to this reference | ||||||||||||||
|
Fulltext file(s):
| ||||||||||||||
All documents in ORBi are protected by a user license.
