MEASUREMENT OF CAPACITY UTILIZATION FOR REVENUE‐MAXIMIZING FIRMS*

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. Copyright 1995 by Blackwell Publishing Ltd and the Board of Trustees of the Bulletin of Economic Research