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What is an overcapacity?

What is an overcapacity? Here are some definitions.

Noun
  1. A capacity for the production of a commodity or product that is in excess of what is needed
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Examples
Demand has been hurt by the problems at the airlines, the telecom bust, and overcapacity in many industries.
The move has essentially sabotaged Germany's construction industry, which is plagued by massive overcapacity.
Industry overcapacity has cut profits, driven consolidation and increased the tension between automakers and suppliers.
The worldwide overcapacity in steel is larger than the U.S. steel industry.
The auto industry faces a global crisis of overcapacity and every major automaker is involved in mergers, corporate restructuring and downsizing.
Now, if they're in an industry suffering from overcapacity and bloated asset prices, they should worry if vultures aren't in sight.

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