Advanced Search
MyIDEAS: Login to save this paper or follow this series

How are investment decisions in the steam coal market affected by demand uncertainty and buyer-side market power?

Contents:

Author Info

  • Paulus, Moritz

    ()
    (Energiewirtschaftliches Institut an der Universitaet zu Koeln)

Abstract

During the last decade, China has evolved into the largest consumer by far and one of the largest importers of coal. The main driver for the increase in coal demand in China has been economic growth. Future Chinese growth rates, and therefore coal consumption and coal imports, are highly uncertain, which may a ffect proffitability of new investments of international mining companies. Furthermore, China has actively employed an array of instruments to control coal trade flows in the last years. In this paper, we analyse the potential impact of increased Chinese coal import volatility and of potential exertion of Chinese market power on global mining investment decisions. For this purpose, we develop a multi-stage stochastic equilibrium model which is able to simulate investments under uncertainty and a monopolistic player in addition to a competitive fringe. We find that accounting for Chinese demand uncertainty yields significant costs for investors and also leads to a delay in investments. Additionally, the exertion of Chinese market power further reduces overall investment activity.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.ewi.uni-koeln.de/fileadmin/user_upload/Publikationen/Working_Paper/EWI_WP_12-03_Market_Power_COAL_PAULUS-2.pdf
File Function: Full text
Download Restriction: no

Bibliographic Info

Paper provided by Energiewirtschaftliches Institut an der Universitaet zu Koeln in its series EWI Working Papers with number 2012-3.

as in new window
Length: 28 pages
Date of creation: 19 Mar 2012
Date of revision:
Handle: RePEc:ris:ewikln:2012_003

Contact details of provider:
Postal: Vogelsanger Str. 321, Alte Wagenfabrik, 50827 Köln
Phone: ++ 49 (0) 221 277 29 100
Fax: ++ 49 (0) 221 277 29 400
Web page: http://www.ewi.uni-koeln.de/
More information through EDIRC

Related research

Keywords: Investments under uncertainty; value of perfect information; risk aversion; strategic behaviour;

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Johannes Truby and Moritz Paulus, 2012. "Market Structure Scenarios in International Steam Coal Trade," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3).
  2. Paulus, Moritz & Trüby, Johannes, 2011. "Coal lumps vs. electrons: How do Chinese bulk energy transport decisions affect the global steam coal market?," Energy Economics, Elsevier, vol. 33(6), pages 1127-1137.
  3. Fama, Eugene F., 1977. "Risk-adjusted discount rates and capital budgeting under uncertainty," Journal of Financial Economics, Elsevier, vol. 5(1), pages 3-24, August.
  4. Clemens Haftendorn & Franziska Holz & Christian von Hirschhausen, 2010. "COALMOD-World: A Model to Assess International Coal Markets until 2030," Discussion Papers of DIW Berlin 1067, DIW Berlin, German Institute for Economic Research.
  5. Paulus, Moritz & Trueby, Johannes & Growitsch, Christian, 2011. "Nations as Strategic Players in Global Commodity Markets: Evidence from World Coal Trade," EWI Working Papers 2011-4, Energiewirtschaftliches Institut an der Universitaet zu Koeln.
  6. Clemens Haftendorn & Franziska Holz, 2010. "Modeling and Analysis of the International Steam Coal Trade," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4), pages 205-230.
  7. Zhuang, Jifang & Gabriel, Steven A., 2008. "A complementarity model for solving stochastic natural gas market equilibria," Energy Economics, Elsevier, vol. 30(1), pages 113-147, January.
  8. Bernard, A. & Haurie, A. & Vielle, M. & Viguier, L., 2008. "A two-level dynamic game of carbon emission trading between Russia, China, and Annex B countries," Journal of Economic Dynamics and Control, Elsevier, vol. 32(6), pages 1830-1856, June.
  9. Salant, Stephen W., 1982. "Imperfect competition in the international energy market: a computerized Nash-Cournot model," MPRA Paper 12021, University Library of Munich, Germany.
  10. Clemens Haftendorn & Claudia Kemfert & Franziska Holz, 2011. "What about Coal?: Interactions between Climate Policies and the Global Steam Coal Market until 2030," Discussion Papers of DIW Berlin 1146, DIW Berlin, German Institute for Economic Research.
  11. Genc, Talat S. & Reynolds, Stanley S. & Sen, Suvrajeet, 2007. "Dynamic oligopolistic games under uncertainty: A stochastic programming approach," Journal of Economic Dynamics and Control, Elsevier, vol. 31(1), pages 55-80, January.
Full references (including those not matched with items on IDEAS)

Citations

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:ris:ewikln:2012_003. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Monika Schmid).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.