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MEASUREMENT OF CAPACITY UTILIZATION FOR REVENUE‐MAXIMIZING FIRMS *
Author(s) -
Segerson Kathleen,
Squires Dale
Publication year - 1995
Publication title -
bulletin of economic research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.227
H-Index - 29
eISSN - 1467-8586
pISSN - 0307-3378
DOI - 10.1111/j.1467-8586.1995.tb00602.x
Subject(s) - revenue , microeconomics , marginal revenue , maximization , elasticity (physics) , economics , product (mathematics) , dual (grammatical number) , econometrics , revenue management , price elasticity of demand , scale (ratio) , industrial organization , mathematics , finance , art , materials science , geometry , literature , composite material , physics , quantum mechanics
ABSTRACT A dual measure of capacity utilization is developed for multiproduct, revenue‐maximizing firms. Under the assumption of revenue maximization, the sensitivity of CU to a change in an individual product price is shown to be directly related to the product‐specific scale elasticity. The results are given a simple graphical interpretation.