On the Measurement of Economic Capacity Utilization for MultiProduct Industries

This paper considers capacity utilization measures for the multi-product firm. The single-product dual measure of capacity utilization easily extends to the multi-product case. Three possible extensions of the single-product primal measure are considered. Although each has its limitations because of the restrictions embodied in it, each provides different, yet potentially useful informa-tion about capacity utilization in a multi-product industry. The dual and primal measures of multi-product capacity utilization are applied to the multi-species New England fishing industry to evaluate the potential for capacity expansion under a regulatory program of license limitation. 1