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Imperfect competition in the international coal industry – does it matter?

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  • Raymond Li

    (The Hong Kong Polytechnic University)

Abstract

The market for coal is of increasing significance in policy discussions on carbon reduction. Because the coal market has become increasingly internationalized, and because of the importance of coal in energy generation for industrial purposes and the limitations and costliness of alternative cleaner technologies, the use of multi-country, multi-sectoral computable general equilibrium (CGE) economic models is very popular for the evaluation of policies. These types of models frequently contain generic market structure assumptions that enhance the general applicability of the models but may limit their value for specific issues. This article evaluates the effects of imperfect competition in the international coal market under the CGE modeling framework. The results generated under various market structure scenarios are very similar, indicating that the structure of the international coal market does not play a significant role in determining the policy simulation outcomes. It can be concluded that coal-related CGE analyses can make use of the simple but robust perfect competition assumption and priority can be given to issues other than the underlying international coal market structure.

Suggested Citation

  • Raymond Li, 2012. "Imperfect competition in the international coal industry – does it matter?," Economics Bulletin, AccessEcon, vol. 32(3), pages 1821-1830.
    • Handle: RePEc:ebl:ecbull:eb-11-00062
    as

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    References listed on IDEAS

    as
    1. Roberto Roson, 2006. "Introducing Imperfect Competition in CGE Models: Technical Aspects and Implications," Computational Economics, Springer;Society for Computational Economics, vol. 28(1), pages 29-49, August.
    2. Clemens Haftendorn & Franziska Holz, 2008. "Analysis of the World Market for Steam Coal Using a Complementarity Model," Discussion Papers of DIW Berlin 818, DIW Berlin, German Institute for Economic Research.
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    4. Francois, Joseph F., 1998. "Scale Economies And Imperfect Competition In The Gtap Model," Technical Papers 28718, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    5. Graham, Paul & Thorpe, Sally & Hogan, Lindsay, 1999. "Non-competitive market behaviour in the international coking coal market," Energy Economics, Elsevier, vol. 21(3), pages 195-212, June.
    6. Willenbockel, Dirk, 2004. "Specification choice and robustness in CGE trade policy analysis with imperfect competition," Economic Modelling, Elsevier, vol. 21(6), pages 1065-1099, December.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    GTAP-E model; imperfect competition; international coal market;
    All these keywords.

    JEL classification:

    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy

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