IDEAS home Printed from https://ideas.repec.org/a/eee/jrpoli/v70y2021ics0301420720309600.html
   My bibliography  Save this article

A game theory application in the copper market

Author

Listed:
  • Otgochuluu, Ch.
  • Altangerel, L.
  • Battur, G.
  • Khashchuluun, Ch.
  • Dorjsundui, G.

Abstract

Mongolia has a small open economy that is growing due to its status as one of the major copper exporters in the Asian copper market. We used game theory to analyze the Chinese copper market and determine the competitive strategies used by Mongolian exporters. We show that a variational inequality approach is one option to prove that game theory is applicable in the analysis of the Chinese copper market, as it is spatial and concentrated. To solve the profit maximization problem with a concave objective function for each player and linear strategy set, it can be reduced to variational inequalities. Numerical calculations allow us to predict the responses of certain parameters against external factors or so-called non-economic shocks, such as changes in Chinese import policies, strikes in Chile, etc. In the future, if Mongolia builds a new copper smelter, it will be a competitor within a more concentrated market than that of the current copper concentrate trade. Thus, the importance of developing such a model is increasing.

Suggested Citation

  • Otgochuluu, Ch. & Altangerel, L. & Battur, G. & Khashchuluun, Ch. & Dorjsundui, G., 2021. "A game theory application in the copper market," Resources Policy, Elsevier, vol. 70(C).
    • Handle: RePEc:eee:jrpoli:v:70:y:2021:i:c:s0301420720309600
    DOI: 10.1016/j.resourpol.2020.101931
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0301420720309600
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.resourpol.2020.101931?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. Lorenczik, Stefan & Panke, Timo, 2016. "Assessing market structures in resource markets — An empirical analysis of the market for metallurgical coal using various equilibrium models," Energy Economics, Elsevier, vol. 59(C), pages 179-187.
    2. Lorenczik, Stefan & Malischek, Raimund & Trüby, Johannes, 2017. "Modeling strategic investment decisions in spatial markets," European Journal of Operational Research, Elsevier, vol. 256(2), pages 605-618.
    3. 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 (EWI).
    4. Francisco Facchinei & Christian Kanzow, 2010. "Generalized Nash Equilibrium Problems," Annals of Operations Research, Springer, vol. 175(1), pages 177-211, March.
    5. Dafermos, Stella & Nagurney, Anna, 1987. "Oligopolistic and competitive behavior of spatially separated markets," Regional Science and Urban Economics, Elsevier, vol. 17(2), pages 245-254.
    6. Patrick T. Harker, 1986. "Alternative Models of Spatial Competition," Operations Research, INFORMS, vol. 34(3), pages 410-425, June.
    Full references (including those not matched with items on IDEAS)

    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. Tan Miller & Terry Friesz & Roger Tobin & Changhyun Kwon, 2007. "Reaction Function Based Dynamic Location Modeling in Stackelberg–Nash–Cournot Competition," Networks and Spatial Economics, Springer, vol. 7(1), pages 77-97, March.
    2. Lorenczik, Stefan & Panke, Timo, 2016. "Assessing market structures in resource markets — An empirical analysis of the market for metallurgical coal using various equilibrium models," Energy Economics, Elsevier, vol. 59(C), pages 179-187.
    3. Konur, Dinçer & Geunes, Joseph, 2012. "Competitive multi-facility location games with non-identical firms and convex traffic congestion costs," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 48(1), pages 373-385.
    4. Shaun Lichter & Terry Friesz & Christopher Griffin & Amir Bagherzadeh, 2022. "Collaborative Network Topologies in Spatial Economies," Networks and Spatial Economics, Springer, vol. 22(3), pages 439-459, September.
    5. Possamai, Janaína Poffo & Pescador, Andresa & Mayerle, Sérgio Fernando & Neiva de Figueiredo, João, 2015. "Optimal commodity price stabilization as a multi-period spatial equilibrium problem: A supernetwork approach with public buffer stocks," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 77(C), pages 289-310.
    6. Oliver Stein & Nathan Sudermann-Merx, 2016. "The Cone Condition and Nonsmoothness in Linear Generalized Nash Games," Journal of Optimization Theory and Applications, Springer, vol. 170(2), pages 687-709, August.
    7. Anna Nagurney & Dong Li, 2014. "Equilibria and dynamics of supply chain network competition with information asymmetry in quality and minimum quality standards," Computational Management Science, Springer, vol. 11(3), pages 285-315, July.
    8. Nadja Harms & Tim Hoheisel & Christian Kanzow, 2015. "On a Smooth Dual Gap Function for a Class of Player Convex Generalized Nash Equilibrium Problems," Journal of Optimization Theory and Applications, Springer, vol. 166(2), pages 659-685, August.
    9. Lorenzo Lampariello & Simone Sagratella, 2015. "It is a matter of hierarchy: a Nash equilibrium problem perspective on bilevel programming," DIAG Technical Reports 2015-07, Department of Computer, Control and Management Engineering, Universita' degli Studi di Roma "La Sapienza".
    10. Arndt, Channing & Schiller, Rico & Tarp, Finn, 2001. "Grain transport and rural credit in Mozambique: solving the space-time problem," Agricultural Economics, Blackwell, vol. 25(1), pages 59-70, June.
    11. Trüby, Johannes, 2013. "Strategic behaviour in international metallurgical coal markets," Energy Economics, Elsevier, vol. 36(C), pages 147-157.
    12. P Plummer & R Haining & E Sheppard, 1998. "Spatial Pricing in Interdependent Markets: Testing Assumptions and Modeling Price Variation. A Case Study of Gasoline Retailing in St Cloud, Minnesota," Environment and Planning A, , vol. 30(1), pages 67-84, January.
    13. Nagurney, Anna & Saberi, Sara & Shukla, Shivani & Floden, Jonas, 2015. "Supply chain network competition in price and quality with multiple manufacturers and freight service providers," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 77(C), pages 248-267.
    14. Schwarz, Hans-Gunter, 2006. "Economic materials-product chain models: Current status, further development and an illustrative example," Ecological Economics, Elsevier, vol. 58(2), pages 373-392, June.
    15. Thomas Quint & Martin Shubik, 2003. "On Local and Network Games," Cowles Foundation Discussion Papers 1414, Cowles Foundation for Research in Economics, Yale University.
    16. Anna Nagurney & Ladimer Nagurney, 2015. "A game theory model of cybersecurity investments with information asymmetry," Netnomics, Springer, vol. 16(1), pages 127-148, August.
    17. Paulus, Moritz, 2012. "How are investment decisions in the steam coal market affected by demand uncertainty and buyer-side market power?," EWI Working Papers 2012-3, Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI).
    18. Alexey Izmailov & Mikhail Solodov, 2014. "On error bounds and Newton-type methods for generalized Nash equilibrium problems," Computational Optimization and Applications, Springer, vol. 59(1), pages 201-218, October.
    19. C. Lalitha & Mansi Dhingra, 2013. "Optimization reformulations of the generalized Nash equilibrium problem using regularized indicator Nikaidô–Isoda function," Journal of Global Optimization, Springer, vol. 57(3), pages 843-861, November.
    20. Leonardo Galli & Christian Kanzow & Marco Sciandrone, 2018. "A nonmonotone trust-region method for generalized Nash equilibrium and related problems with strong convergence properties," Computational Optimization and Applications, Springer, vol. 69(3), pages 629-652, April.

    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:70:y:2021:i:c:s0301420720309600. 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.