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Market Structure Scenarios in International Steam Coal Trade

  • Trueby, Johannes

    ()

    (Energiewirtschaftliches Institut an der Universitaet zu Koeln)

  • Paulus, Moritz

    ()

    (Energiewirtschaftliches Institut an der Universitaet zu Koeln)

The seaborne steam coal market changed in recent years. Trade volumes grew dynamically, important players emerged and since 2007 prices increased significantly and remained relatively high since then. In this paper we analyse market equilibria in the years 2006 and 2008 by testing for two possible market structure scenarios in this market: perfect competition and an oligopoly setup with major exporters competing in quantities. We conclude from our results that international steam coal trade is not perfectly competitive as there is a large spread between marginal costs and prices and a low capacity utilisation in 2008. Further, trade flows are generally more diversified in reality than in the competitive scenario. However, also the Cournot scenarios fail to accurately explain real market outcomes. We conclude that only more sophisticated models of strategic behaviour can predict market equilibria in international steam coal trade.

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Paper provided by Energiewirtschaftliches Institut an der Universitaet zu Koeln in its series EWI Working Papers with number 2011-2.

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Length: 24 pages
Date of creation: 12 Apr 2011
Date of revision:
Handle: RePEc:ris:ewikln:2011_002
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  1. Labys, Walter C. & Yang, Chin W., 1980. "A quadratic programming model of the Appalachian steam coal market," Energy Economics, Elsevier, vol. 2(2), pages 86-95, April.
  2. Kulshreshtha, Mudit & Parikh, Jyoti K., 2000. "Modeling demand for coal in India: vector autoregressive models with cointegrated variables," Energy, Elsevier, vol. 25(2), pages 149-168.
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  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.
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  8. Lin Chan, Hing & Kam Lee, Shu, 1997. "Modelling and forecasting the demand for coal in China," Energy Economics, Elsevier, vol. 19(3), pages 271-287, July.
  9. Dahl, Carol A., 1993. "A survey of energy demand elasticities in support of the development of the NEMS," MPRA Paper 13962, University Library of Munich, Germany.
  10. Nagl, Stephan & Fürsch, Michaela & Paulus, Moritz & Richter, Jan & Trueby, Johannes & Lindenberger, Dietmar, 2010. "Scenarios for an Energy Policy Concept of the German Government," EWI Working Papers 2010-6, Energiewirtschaftliches Institut an der Universitaet zu Koeln.
  11. Paulus, Moritz & Borggrefe, Frieder, 2011. "The potential of demand-side management in energy-intensive industries for electricity markets in Germany," Applied Energy, Elsevier, vol. 88(2), pages 432-441, February.
  12. Soderholm, Patrik, 2001. "Fossil fuel flexibility in west European power generation and the impact of system load factors," Energy Economics, Elsevier, vol. 23(1), pages 77-97, January.
  13. Kolstad, Charles D. & Abbey, David S., 1984. "The effect of market conduct on international steam coal trade," European Economic Review, Elsevier, vol. 24(1), pages 39-59.
  14. Dahl, Carol & Ko, James, 1998. "The effect of deregulation on US fossil fuel substitution in the generation of electricity," Energy Policy, Elsevier, vol. 26(13), pages 981-988, November.
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