Overcapacities financial definition of overcapacities
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overcapacity a situation in which a firm or industry has too much production CAPACITY on hand relative to current demand levels. This may be only temporary because of a downturn in the BUSINESS CYCLE. Alternatively, the decline in demand may be permanent (see PRODUCT LIFE CYCLE) or due to the industry having overinvested in new plant relative to long-run demand potential. In this case, overcapacity, leading to greater competition for limited sales is often removed by the disappearance of inefficient firms from the industry, or by RATIONALIZATION schemes involving the MERGER of firms and closure of redundant plant.
References in periodicals archive
This allows envion to make use of energy overcapacities
in a profitable setting.
Already existing overcapacities
in markets had been exacerbated by Russia's ban on pork product imports, in retaliation for the West's sanctions against the Kremlin over its perceived role in the Ukraine conflict.