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Strategic Behaviour in International Metallurgical Coal Markets

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  • Trüby, Johannes

    ()
    (Energiewirtschaftliches Institut an der Universitaet zu Koeln)

Abstract

This paper analyses whether prices and trade-flows in the international market for metallurgical coals were subject to non-competitive conduct in the period 2008 to 2010. To do so, I develop mathematical programming models – a Stackelberg model, two varieties of a Cournot model, and a perfect competition model – for computing spatial equilibria in international resource markets. Results are analysed with various statistical measures to assess prediction accuracy of the models. The results show that real market equilibria cannot be reproduced with a competitive model. However, real market outcomes can be accurately simulated with the non-competitive models suggesting that market equilibria in the international metallurgical coal trade were subject to strategic behaviour of coal exporters.

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Bibliographic Info

Paper provided by Energiewirtschaftliches Institut an der Universitaet zu Koeln in its series EWI Working Papers with number 2012-12.

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Length: 39 pages
Date of creation: 20 Sep 2012
Date of revision:
Handle: RePEc:ris:ewikln:2012_012

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Keywords: metallurgical coal trade; market power; oligopoly; Stackelberg; Cournot;

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References

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  1. Franziska Holz & Christian von Hirschhausen & Claudia Kemfert, 2006. "A Strategic Model of European Gas Supply (GASMOD)," Discussion Papers of DIW Berlin 551, DIW Berlin, German Institute for Economic Research.
  2. Wolak, Frank A. & Kolstad, Charles D., 1988. "Measuring relative market power in the Western U.S. coal market using Shapley values," Resources and Energy, Elsevier, vol. 10(4), pages 293-314, December.
  3. James B. Bushnell & Erin T. Mansur & Celeste Saravia, 2008. "Vertical Arrangements, Market Structure, and Competition: An Analysis of Restructured US Electricity Markets," American Economic Review, American Economic Association, vol. 98(1), pages 237-66, March.
  4. Bard, Jonathan F. & Plummer, John & Claude Sourie, Jean, 2000. "A bilevel programming approach to determining tax credits for biofuel production," European Journal of Operational Research, Elsevier, vol. 120(1), pages 30-46, January.
  5. 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.
  6. Trueby, Johannes & Paulus, Moritz, 2011. "Market Structure Scenarios in International Steam Coal Trade," EWI Working Papers 2011-2, Energiewirtschaftliches Institut an der Universitaet zu Koeln.
  7. 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.
  8. Yang, Chin W. & Hwang, Ming J. & Sohng, Soong N., 2002. "The Cournot competition in the spatial equilibrium model," Energy Economics, Elsevier, vol. 24(2), pages 139-154, March.
  9. Daniel Huppmann and Franziska Holz, 2012. "Crude Oil Market Power—A Shift in Recent Years?," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4).
  10. Yihsu Chen & Benjamin Hobbs & Sven Leyffer & Todd Munson, 2006. "Leader-Follower Equilibria for Electric Power and NO x Allowances Markets," Computational Management Science, Springer, vol. 3(4), pages 307-330, September.
  11. Chang, Hui-Shung, 1997. "Coking coal procurement policies of the Japanese steel mills: changes and implications," Resources Policy, Elsevier, vol. 23(3), pages 125-135, September.
  12. Salant, Stephen W & Switzer, Sheldon & Reynolds, Robert J, 1983. "Losses from Horizontal Merger: The Effects of an Exogenous Change in Industry Structure on Cournot-Nash Equilibrium," The Quarterly Journal of Economics, MIT Press, vol. 98(2), pages 185-99, May.
  13. Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, December.
  14. 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.
  15. Gabriel, Steven A. & Leuthold, Florian U., 2010. "Solving discretely-constrained MPEC problems with applications in electric power markets," Energy Economics, Elsevier, vol. 32(1), pages 3-14, January.
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Cited by:
  1. Growitsch, Christian & Hecking, Harald & Panke, Timo, 2013. "Supply disruptions and regional price effects in a spatial oligopoly - an application to the global gas market," EWI Working Papers 2013-8, Energiewirtschaftliches Institut an der Universitaet zu Koeln.

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