The Malmquist productivity index and plant capacity utilization

A new decomposition of the Malmquist productivity index is proposed to acco unt for changes in plant capacity utilization. Using a primal, non-parametr ic specification of technology, the Malmquist index is decomposed into tech nical efficiency change, variations in plant capacity utilization and front ier shifts. It provides an alternative to the available methods of incorpor ating capacity utilization changes into measures of productivity change. Su ch measures are based on parametric land, in many cases, dual) technology s pecifications; moreover, they typically do not allow for technical ineffici ency.