A Study Of The International Market Structure And Market Power Of Resource Products

Since the reform and opening up especially 1990s of the last century, people all over the world fix their eyes on the success of economic development in China. China has become the secondly greatest engine of the world's economic development. But as a big buyer and big provider of numerous commodities in the world market, China now is besieged on all sides. On the one hand, China takes absolute market share in the export markets of several commodities such as coke and rare earth, but China hasn't got correspongding price superiority. On the contrary, the prices of these commodities are in a posture of long-term dropping. On the other hand, the prices of the world's primary commodities such as iron ore and oil, which China has to import, rise to a newly high level these years. China is suffering a lot while importing at high prices.This article begins with the reality of trade on the resource commodity, including the reserves structure, the trade structure and the trend of price, followed with the characteristic of the resource commodity. Then it studies the market structure of resource commodity to find out that both the product market and the consumption market are oligopoly, such as oil, natural gas, coal rare earth, bean, iron ore, and so on, where China is one of the oligopsonists. After that I set up two theoretic models, one of which is about market power for those without other country's competition, the other one is about market power for those considering other exporter's competition, to figure out the market power of the China's rare earth in the international market.The empirical studies show that China has almost no market power in the rare earth market, which is converse to China's oligopoly in the international market. The reason why this happened is as follows: firstly, the industrial structure of the rare earth in China, like low entry cost and furious price competition. Secondly, the government's policies on export, product and strategic reserve are also play a very important role. To solve those problems, the author suggests that it is the time that the government took some measure. Those measures also can be took to other resource commodity.