Analysis of the world market for steam coal using a complementarity model

Arbeitspapier

With its resource availability and the prospect of climate friendly technology, coal continues to play an important role in the global energy sector. We develop a complementarity model of the international market for steam coal. We want to analyze the level of competition in this market which is strategic for the importers' security of energy supply. In a spatial equilibrium framework, we assume the steam coal exporters to maximize their profits by choosing the optimal quantity to sell to each importing country. We compare two possible scenarios: perfect competition and Cournot competition. The results, especially the price levels, indicate that the Cournot model is not realistic, suggesting that the producing countries do not exert market power. However, the trade flows and prices observed in reality suggests that there is some form of market power with price discrimination, possibly following a Bertrand model in a spatial setting.

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• Language: Englisch

References and Relationships

• Bibliographic citation: Series: DIW Discussion Papers ; No. 818

Classification and Topics

• Classification: Wirtschaft ; Production, Pricing, and Market Structure; Size Distribution of Firms ; Mining, Extraction, and Refining: Other Nonrenewable Resources ; Mathematical Methods; Programming Models; Mathematical and Simulation Modeling: Other
• Subject: Coal ; energy ; market structure ; simulation model ; Kohlenmarkt ; Marktstruktur ; Kohle ; Außenhandel ; Duopol ; Räumliche Gleichgewichtstheorie ; Welt

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Haftendorn, Clemens ; Holz, Franziska
• Event: Veröffentlichung
• (who): Deutsches Institut für Wirtschaftsforschung (DIW)
• (where): Berlin
• (when): 2008

Further information

• Handle: http://hdl.handle.net/10419/27341