Based on different academic view point about the causes of excess capacity formation, this paper puts forward firms' factor hoarding behavior hypothesis for macroeconomic fluctuation, arguing that macroeconomic fluctuation and shock can lead to excess capacity. We use the stochastic dynamic optimization method to build a math ematical model of economic fluctuation hypothesis about the formation of excess capacity, and then analyze and describe the excess capacity formation mechanism caused by factor hoarding behavior, which results from macroeconomic fluctuation. We also make use of the 1995-2005 region industrial data of China to take excess capacity measurement based on non-parameter production frontier and Pooled data regression model including heterosced asticity and autocorrelation consistency modification to validate the existence of the hoarding effect.

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