IDEAS home Printed from https://ideas.repec.org/a/eee/jrpoli/v64y2019ics0301420718306858.html
   My bibliography  Save this article

Time-varying international market power for the Chinese iron ore markets

Author

Listed:
  • Zhu, Xuehong
  • Zheng, Weihang
  • Zhang, Hongwei
  • Guo, Yaoqi

Abstract

This study analyses the dynamics of iron ore's international market power on exports to China by Australia, Brazil, India and South Africa. It uses the residual demand elasticity (RDE) model and rolling window regression model and applies the monthly data for the international iron ore market over the period from January 2006 to December 2016. The results indicate that (1) Australia and Brazil exercise market power in the Chinese iron ore market, but India and South Africa have no market power in the iron ore market; (2) market power has a time-varying nature, particularly in Australia and Brazil; and (3) changes in the pricing regime in the international iron ore market have a profound impact on market power. Furthermore, to maintain the stability of the Chinese iron ore market, exporters are suggested to enhance their competitiveness and gain greater market power on the basis of maintaining market share, and China should optimize its trade structure.

Suggested Citation

  • Zhu, Xuehong & Zheng, Weihang & Zhang, Hongwei & Guo, Yaoqi, 2019. "Time-varying international market power for the Chinese iron ore markets," Resources Policy, Elsevier, vol. 64(C).
    • Handle: RePEc:eee:jrpoli:v:64:y:2019:i:c:s0301420718306858
    DOI: 10.1016/j.resourpol.2019.101502
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0301420718306858
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.resourpol.2019.101502?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Todorova, Neda, 2015. "The course of realized volatility in the LME non-ferrous metal market," Economic Modelling, Elsevier, vol. 51(C), pages 1-12.
    2. Hurst, Luke, 2015. "The development of the Asian iron ore market: A lesson in long-run market contestability," Resources Policy, Elsevier, vol. 46(P2), pages 22-29.
    3. Yang, Cai & Gong, Xu & Zhang, Hongwei, 2019. "Volatility forecasting of crude oil futures: The role of investor sentiment and leverage effect," Resources Policy, Elsevier, vol. 61(C), pages 548-563.
    4. Milstein, Irena & Tishler, Asher, 2015. "Can price volatility enhance market power? The case of renewable technologies in competitive electricity markets," Resource and Energy Economics, Elsevier, vol. 41(C), pages 70-90.
    5. Wu, Jinxi & Yang, Jie & Ma, Linwei & Li, Zheng & Shen, Xuesi, 2016. "A system analysis of the development strategy of iron ore in China," Resources Policy, Elsevier, vol. 48(C), pages 32-40.
    6. Croutzet, Alexandre & Lasserre, Pierre, 2017. "Optimal completeness of property rights on renewable resources in the presence of market power," Resource and Energy Economics, Elsevier, vol. 49(C), pages 16-32.
    7. Zhu, Xuehong & Zhang, Hongwei & Zhong, Meirui, 2017. "Volatility forecasting using high frequency data: The role of after-hours information and leverage effects," Resources Policy, Elsevier, vol. 54(C), pages 58-70.
    8. Yimiao Gu & Zhenxi Chen & Donald Lien, 2019. "Baltic Dry Index and iron ore spot market: dynamics and interactions," Applied Economics, Taylor & Francis Journals, vol. 51(35), pages 3855-3863, July.
    9. Golombek, Rolf & Irarrazabal, Alfonso A. & Ma, Lin, 2018. "OPEC's market power: An empirical dominant firm model for the oil market," Energy Economics, Elsevier, vol. 70(C), pages 98-115.
    10. Ma, Yiqun, 2013. "Iron ore spot price volatility and change in forward pricing mechanism," Resources Policy, Elsevier, vol. 38(4), pages 621-627.
    11. Goldberg, Pinelopi Koujianou & Knetter, Michael M., 1999. "Measuring the intensity of competition in export markets," Journal of International Economics, Elsevier, vol. 47(1), pages 27-60, February.
    12. G. E. Brandow, 1969. "Market Power and Its Sources in the Food Industry," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 51(1), pages 1-12.
    13. Hurst, Luke, 2015. "Assessing the competitiveness of the supply side response to China's iron ore demand shock," Resources Policy, Elsevier, vol. 45(C), pages 247-254.
    14. Hall, Robert E, 1988. "The Relation between Price and Marginal Cost in U.S. Industry," Journal of Political Economy, University of Chicago Press, vol. 96(5), pages 921-947, October.
    15. Afshar, Karim & Ghiasvand, Farshad Shamsini & Bigdeli, Nooshin, 2018. "Optimal bidding strategy of wind power producers in pay-as-bid power markets," Renewable Energy, Elsevier, vol. 127(C), pages 575-586.
    16. Alex Stomper, 2006. "A Theory of Banks' Industry Expertise, Market Power, and Credit Risk," Management Science, INFORMS, vol. 52(10), pages 1618-1633, October.
    17. Chen, Wenhui & Lei, Yalin & Jiang, Yong, 2016. "Influencing factors analysis of China’s iron import price: Based on quantile regression model," Resources Policy, Elsevier, vol. 48(C), pages 68-76.
    18. Zsombor Pall & Oleksandr Perekhozhuk & Thomas Glauben & Sören Prehn & Ramona Teuber, 2014. "Residual demand measures of market power of Russian wheat exporters," Agricultural Economics, International Association of Agricultural Economists, vol. 45(3), pages 381-391, May.
    19. A. P. Lerner, 1934. "The Concept of Monopoly and the Measurement of Monopoly Power," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 1(3), pages 157-175.
    20. Hongwei Zhang & Xuehong Zhu & Yaoqi Guo & Haibo Liu, 2018. "A separate reduced‐form volatility forecasting model for nonferrous metal market: Evidence from copper and aluminum," Journal of Forecasting, John Wiley & Sons, Ltd., vol. 37(7), pages 754-766, November.
    21. Alamri, Yosef & Saghaian, Sayed, 2016. "Measuring the Intensity of Competition among Rice Exporters to Saudi Arabia," 2017 Annual Meeting, February 4-7, 2017, Mobile, Alabama 252678, Southern Agricultural Economics Association.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Yang, Dong & Zhang, Lingge & Luo, Meifeng & Li, Feng, 2020. "Does shipping market affect international iron ore trade?– An equilibrium analysis," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 144(C).
    2. Asadi, Mehrad & Roudari, Soheil & Tiwari, Aviral Kumar & Roubaud, David, 2023. "Scrutinizing commodity markets by quantile spillovers: A case study of the Australian economy," Energy Economics, Elsevier, vol. 118(C).
    3. Yufeng CHEN & Shuo YANG, 2022. "How Does the Reform in Pricing Mechanism Affect the World’s Iron Ore Price: A Time-Varying Parameter SVAR Model," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(2), pages 83-103, April.
    4. Shao, Liuguo & Zhang, Hua, 2020. "The impact of oil price on the clean energy metal prices: A multi-scale perspective," Resources Policy, Elsevier, vol. 68(C).
    5. Silveira, Jáilison W. & Resende, Marcelo, 2020. "Competition in the international niobium market: A residual demand approach," Resources Policy, Elsevier, vol. 65(C).
    6. Manzoor Ahmad & Shehzad Khan & Zahoor Ul Haq & Shoukat Iqbal Khattak, 2024. "Measuring Market Power in the Sugar Industry of Pakistan," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(2), pages 5095-5120, June.
    7. Wei, Jiangqiao & Ma, Zhe & Wang, Anjian & Li, Pengyuan & Sun, Xiaoyan & Yuan, Xiaojing & Hao, Hongchang & Jia, Hongxiang, 2022. "Multiscale nonlinear Granger causality and time-varying effect analysis of the relationship between iron ore futures and spot prices," Resources Policy, Elsevier, vol. 77(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Yufeng CHEN & Shuo YANG, 2022. "How Does the Reform in Pricing Mechanism Affect the World’s Iron Ore Price: A Time-Varying Parameter SVAR Model," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(2), pages 83-103, April.
    2. Wei, Jiangqiao & Ma, Zhe & Wang, Anjian & Li, Pengyuan & Sun, Xiaoyan & Yuan, Xiaojing & Hao, Hongchang & Jia, Hongxiang, 2022. "Multiscale nonlinear Granger causality and time-varying effect analysis of the relationship between iron ore futures and spot prices," Resources Policy, Elsevier, vol. 77(C).
    3. Niu, Zibo & Liu, Yuanyuan & Gao, Wang & Zhang, Hongwei, 2021. "The role of coronavirus news in the volatility forecasting of crude oil futures markets: Evidence from China," Resources Policy, Elsevier, vol. 73(C).
    4. Su, Chi-Wei & Wang, Kai-Hua & Chang, Hsu-Ling & Dumitrescu–Peculea, Adelina, 2017. "Do iron ore price bubbles occur?," Resources Policy, Elsevier, vol. 53(C), pages 340-346.
    5. Hervani, Aref A., 2005. "Can oligopsony power be measured? The case of U.S. old newspapers market," Resources, Conservation & Recycling, Elsevier, vol. 44(4), pages 343-380.
    6. Wenxin Wang & Yaowen Liang & Zhuo Ru & Haojie Guo & Bingjie Zhao, 2023. "World Forage Import Market: Competitive Structure and Market Forces," Agriculture, MDPI, vol. 13(9), pages 1-18, August.
    7. Zhu, Xuehong & Li, Xinyuan & Zhang, Hongwei & Huang, Jianbai, 2019. "International market power analysis of China’s tungsten export market -- from the perspective of tungsten export policies," Resources Policy, Elsevier, vol. 61(C), pages 643-652.
    8. Lukáš Čechura & Tinoush Jamali Jaghdani, 2021. "Market Imperfections within the European Wheat Value Chain: The Case of France and the United Kingdom," Agriculture, MDPI, vol. 11(9), pages 1-21, August.
    9. Andrade de Sá, Saraly & Daubanes, Julien, 2016. "Limit pricing and the (in)effectiveness of the carbon tax," Journal of Public Economics, Elsevier, vol. 139(C), pages 28-39.
    10. Kerstin Uhl & Oleksandr Perekhozhuk & Thomas Glauben, 2016. "Price Discrimination in Russian Wheat Exports: Evidence from Firm-level Data," Journal of Agricultural Economics, Wiley Blackwell, vol. 67(3), pages 722-740, September.
    11. Singer, Gregor, 2024. "Complementary inputs and industrial development: can lower electricity prices improve energy efficiency?," LSE Research Online Documents on Economics 122365, London School of Economics and Political Science, LSE Library.
    12. Guo, Sui & Li, Huajiao & An, Haizhong & Sun, Qingru & Hao, Xiaoqing & Liu, Yanxin, 2019. "Steel product prices transmission activities in the midstream industrial chain and global markets," Resources Policy, Elsevier, vol. 60(C), pages 56-71.
    13. Ewees, Ahmed A. & Elaziz, Mohamed Abd & Alameer, Zakaria & Ye, Haiwang & Jianhua, Zhang, 2020. "Improving multilayer perceptron neural network using chaotic grasshopper optimization algorithm to forecast iron ore price volatility," Resources Policy, Elsevier, vol. 65(C).
    14. Yang, Cai & Gong, Xu & Zhang, Hongwei, 2019. "Volatility forecasting of crude oil futures: The role of investor sentiment and leverage effect," Resources Policy, Elsevier, vol. 61(C), pages 548-563.
    15. Stephen Martin, 2012. "Market Structure and Market Performance," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 40(2), pages 87-108, March.
    16. Koichi Yamaura, 2011. "Market Power of the Japanese Non-GM Soybean Import Market: The U.S. Exporters vs. Japanese Importers," Asian Journal of Agriculture and Rural Development, Asian Economic and Social Society, vol. 1(2), pages 80-89.
    17. Liu, Yanxin & Li, Huajiao & Guan, Jianhe & Liu, Xueyong & Guan, Qing & Sun, Qingru, 2019. "Influence of different factors on prices of upstream, middle and downstream products in China's whole steel industry chain: Based on Adaptive Neural Fuzzy Inference System," Resources Policy, Elsevier, vol. 60(C), pages 134-142.
    18. Luo, Jiawen & Ji, Qiang & Klein, Tony & Todorova, Neda & Zhang, Dayong, 2020. "On realized volatility of crude oil futures markets: Forecasting with exogenous predictors under structural breaks," Energy Economics, Elsevier, vol. 89(C).
    19. Noelke, Corinna M. & Raper, Kellie Curry, 1999. "Nonstructural And Statistical Nonparametric Market Power Tests: An Empirical Investigation," 1999 Annual meeting, August 8-11, Nashville, TN 21645, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    20. Sergio de Nardis & Cristina Pensa, 2004. "How intense is Competition in International Markets of Traditional goods?," ISAE Working Papers 45, ISTAT - Italian National Institute of Statistics - (Rome, ITALY).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jrpoli:v:64:y:2019:i:c:s0301420718306858. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/30467 .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.