Research On Pricing Of Upstream And Downstream Enterprises In The International Oil Industrial Chain

In recent years, with the rapid development of our country’s economy and the increased domestic market demand for crude oil and other commodities, China has become the world’s second largest oil import and consumption countries. As the monopoly on this large consumer market, Chinese oil enterprises have relapsed into a long-term loss in the down-stream market and get huge subsidies from the government, and also in a weak position while negotiating with up-stream enterprises.Through the investigation of the upstream and downstream market structure, this paper establishes the corresponding mathematical model and does some derivation, analyzing how the ownership of petroleum enterprises affect the pricing decision of upstream and downstream enterprises while changing the external environment. In the closed market the nationalization of petroleum enterprises has no influence on the pricing decision of upstream,but the output of oil products will increase and welfare of the entire society will improve.But when the downstream market opens, the nationalize will result in the low price of oil products and block the entrance of other enterprises. Also, it will lead to a negative impact on the pricing-decision of upstream.This paper also discusses the moral hazard of enterprise from the state-owned petroleum enterprises and the importance of the downstream market power for petroleum enterprises in open market.No matter which road the government choose, they have to face the problem of the corruption in state-owned firms or weak competitiveness of the private-owned firms in open market.This paper is divided into five parts, the first part is the introduction, including the background、review of literature and so on; the second part is about the review of the international oil industry chain, and the main characteristic of Chinese oil market; the third part establishes the model and compare the price of crude oil and oil products in different situations; the forth part mainly studies the influence mechanism of price and further discusses how some factors in this model affect the behavior of enterprises; the last part concludes all the above and puts forward to some suggestions.