Iron Ore is a kind of important basic industrial raw material, which is widely used in almost every aspects of social operation. As a kind of raw material, the distribution of iron ore is extremely broad because iron content is high in crust. Then the iron ore which is worthy extracting is concentrated distributed in Australia, Brazil, Canada, India, South Africa, and Sweden. China is also abundant in iron ore, but its grade is very lower than the world average and the distribution of iron ore in china is scattered. At the same time, such iron ore cannot be used efficiently at existing technical conditions.Nowadays, there are two kinds of pricing in the international iron ore market: long-term price agreement and spot market pricing. The former sets prices before April 1 every year. In the long-term agreement, the iron ore market is composed of three purchasers(China, Japan and Korea, European) and three bargainers (BHP, Rio Tinto, Vale). In their camp, each participant has a strong market force and government background. Participants have the monopoly power within their respective markets, so the iron ore market is a typical bilateral monopoly market. By some postulated conditions and the reality of international ore market, the author sets the specific distribution functions of both seller and buyer. Then the stable solution that both participators divide the whole market profit equally is gotten. Finally, the author proofs that the solution is unique. Both steel and iron ore production progresses are delayed by intensive negotiations every year. As a non-productive behavior, negotiations are greatly increasing the transaction costs of both sides.Iron Ore is a kind of Relationship-Specific Asset & Transaction-Specific Asset. By the theory of Asset Specificity and explaining the ore economic nature, the necessary and the practicability of Steel Corp and Ore Corp Integration is proofed. |