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We find that excluding the cost of unused capacity decreases product costs by approximately 6% and increases gross margins by around 26%. These magnitudes are economically significant and pervasive across industries and over time. Excluding the cost of unused capacity also smooths the time-series variation in unitized product costs and gross margins, with the standard deviation of gross margins declining (significantly) by 5%. Additional analyses indicate the presence of congestion and other costs at high capacity utilization levels, as predicted by the operations literature. <\/jats:p><jats:p> This paper was accepted by Suraj Srinivasan, accounting. <\/jats:p>","DOI":"10.1287\/mnsc.2019.3502","type":"journal-article","created":{"date-parts":[[2020,3,26]],"date-time":"2020-03-26T19:00:57Z","timestamp":1585249257000},"page":"1956-1974","source":"Crossref","is-referenced-by-count":5,"title":["How Economically Significant Are Unused Capacity Costs? 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