STATIC EFFICIENCY DECOMPOSITIONS AND CAPACITY UTILISATION: INTEGRATING ECONOMIC AND TECHNICAL CAPACITY NOTIONS

Diego Prior (1) , Bruno de Borger (2) , Kristiaan Kerstens (3) , Ignace van de Woestyne (4)

1 Business Economics Department
2 Department of Economics
3 Department of Economics
4 Department of Economics

Starting from existing static decompositions of overall economic efficiency on non parametric production and cost frontiers, this paper proposes more comprehensive decompositions including several cost based notions of capacity utilisation. Furthermore, in case prices are lacking, we develop additional decompositions of overall technical efficiency integrating a technical concept of capacity utilisation. These new efficiency decompositions provide a link between short and long run economic analysis and, in empirical work, avoid conflating inefficiency and differences in capacity utilisation. An empirical analysis using a monthly panel of Chilean hydro-electric power plants illustrates the potential of these decomposition proposals.

Mots clés: Social Sciences & Humanities

Domaines: Économie et finance quantitative [q-fin]

Diego Prior, Bruno de Borger, Kristiaan Kerstens, Ignace van de Woestyne. STATIC EFFICIENCY DECOMPOSITIONS AND CAPACITY UTILISATION: INTEGRATING ECONOMIC AND TECHNICAL CAPACITY NOTIONS. Applied Economics, 2011, pp.1. ⟨10.1080/00036846.2011.587783⟩. ⟨hal-00717976⟩