Research On Capacity Utilization And Marginal Cost Of Chinese Automobile Market

This paper uses Random Coefficient Discrete Choice model to explore the relationship of Capacity Utilization Rate (CUR) and Marginal Cost (MC) in China’s Automobile Industry. Using aggregate level data of sales, price and other characteristics of models, demographic data of consumer and firm level capacity data from2004to2009, the GMM estimation reveals that the elasticity of MC to CUR is larger than0, indicating the change of a positive percentage of CUR will lead to an increasing percentage of MC.