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Journal of the Knowledge Economy

, Volume 10, Issue 1, pp 318–334 | Cite as

Nonparametric Measures of Capacity Utilization of the Tunisian Manufacturing Industry: Short- and Long-Run Dual Approach

  • Maha KalaiEmail author
Article
  • 63 Downloads

Abstract

This paper tried to develop a nonparametric method of obtaining the minimum of the long-run average total cost curve of a firm to define its production capacity. It provided a benchmark for the measurement of the capacity utilization rate at the observed output level of the industry. In the case of the long-run constant returns to scale, the minimum of the short-run average total cost curve is determined to measure the short-run capacity utilization. When applied empirically, we measured the annual capacity utilization rates of the Tunisian manufacturing industry and its six sectors over the period 1961–2014. In addition, we developed a nonparametric analysis based on the data envelopment analysis methodology for the quasi-fixed capital factor of the short-run average total cost curve with variable returns to scale using an iterative search procedure. From the estimated results of the capacity utilization, we noticed a significant under-utilization of the production capacity in the manufacturing sector.

Keywords

Data envelopment analysis Capacity utilization Most productive scale size Efficiency 

JEL Classification

C4 D24 L2 

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Copyright information

© Springer Science+Business Media New York 2017

Authors and Affiliations

  1. 1.Faculty of Economics and Management of Sfax, Department of Applied Quantitative MethodsUniversity of SfaxSfaxTunisia

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