What is the major source of excess capacity?

This weeks issue of Exploring Economics looks at the loss in demand resulting from the recent economic recession. Like all other service industries, veterinary services has seen a large reduction in demand growth and this has been a major contributor to the current level of excess capacity.

9 thoughts on “What is the major source of excess capacity?

  1. Dr. Dicks,

    In reading your article, you state that you believe that demand is the biggist factor in the equation of excess capacity.

    By looking at the data that you have supplied in previous artcles, it appears that the change in number of veterinarians is much greater than any change in demand. In fact, it appears that demand has changed very little over time but that the number of practicing veterinarians has and continues to increase.

    Can you help me understand this.

    Thank you

  2. Chip, it is like the rest of the AVMA today. They either hide the real story under smoke, mirrors, or disillusion or make it so difficult to find and under such unnecessary PC steps that it is not worth accessing.

    • Linwood, I am sorry that you are having difficulty finding the article. We are in the process of developing a web page that will make it easier for members to find the economic and finance materials. Please bear with us while we get it ready to launch.

      • Greg, great questions. The trend growth in new veterinarians in approximately 1.6% – 2% and the recent growth (last four years) has been above trend by about 2%. Remember this is just 2% annual increase in the number of new veterinarians (about 70 more per year) compared to a population of veterinarians of between 100,000 and 110,000. The 7.5% reduction in aggregate demand represents a reduction of an average 7.5% across each and every industry (on the average). Demand for veterinary services, according to the Bureau of Economic Analysis, has indeed been flat for the last five years . Exactly the point being made. The demand for veterinary services should have continued to grow and thus, just as with the case for aggregate demand, there is a gap between what the demand for veterinary services should be and what it actually is.

  3. Chip, article is in Exploring Economics. Go to the search engine and type in Exploring Economics and then click on the article. Enjoy the other articles in Exploring Economics as well.

    • I attempted your suggestion and got nowhere fast. Why is there any need to hide these data? This is along with the current AVMA, that I have supported for 45 years, is dysfunctional!!!!! This article should be at the first click finger reach.