Productivity, Price Recovery, Capacity Constraints and their Financial Consequences

Emili Grifell-Tatjé, C. A.Knox Lovell

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Abstract

Mining and fishing are both extractive industries, although one resource is
renewable and the other is not. Miners and fishers pursue financial objectives,
although their objectives may differ. In both industries financial performance is
influenced by productivity and price recovery. Finally, in both industries capacity
constraints influence financial performance, perhaps but not necessarily through
their impact on productivity, and both industries encounter external as well as
internal capacity constraints.
The objective of this study is to develop an analytical framework that links all
four phenomena. We use return on assets to measure financial performance, and
the basic analytical framework is the duPont triangle. We measure productivity in two
ways, with a theoretical technology-based index and with an empirical price-based
index. We measure price change with an empirical quantity-based index. We
measure internal capacity utilisation by relating a pair of output quantity vectors,
actual output and full capacity output, and we develop physical and economic
measures of internal capacity utilisation. External capacity constraints restrict the
ability to reach full capacity output. The analytical framework has productivity
change, price change and change in capacity utilisation influencing change in return
on assets, the latter in two ways, directly and indirectly through its impact on
productivity change
Original languageEnglish
Number of pages26
Publication statusPublished - 2013

Publication series

NameProceedings of the National Marine Fisheries Service Productivity Workshop
PublisherNational Oceanic and Atmospheric Administration (NOAA) Technical Memorandum of the National Marine Fisheries Servies
No.NOAA-TM-NMFS-SWFSC-503

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