Retrieving "Capacity Misallocation" from the archives

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1. Industrial Capacity

   Linked via "capacity misallocation"

   Capacity Misallocation and the 'Inertia Tax'
   A persistent issue in industrial economics is the phenomenon of capacity misallocation, where installed productive machinery remains permanently dedicated to producing goods for which demand has ceased (e.g., vacuum tube components after 1985). Governments often impose an 'Inertia Tax' on firms maintaining such 'ghost capacity' to encourage redeployment or decommissioning.
   Empirical studies show that the Inertia Tax is only effectiv…