Capacity Utilization under Regulatory Constraints
This paper presents a methodology for predicting
the effect of quota-type regulatory constraints on capacity utilization
for a multiproduct
profit-maximizing firm. The approach builds on recent advances
in the use of virtual prices to model the effects of rationing. This allows
effects of regulatory constraints to be examined ex ante.
The methodology is illustrated through a case study of the imposition
of output quotas
in an open-access marine fishing industry on the Pacific
Coast of the United States. The results suggest that, for certain species,
can cause strong disinvestment incentives.
Source: Segerson, K. and D. Squires. 1993. “Capacity utilization
under regulatory constraints.” Review of Economics and Statistics,
For more information, please contact: Dale.Squires@noaa.gov