Research On The Ways To Enhance The Buy Power Of The Iron Ore Market

Buyer power is a type of market power. Most of the early researches have paid much attention to the market power but in the assumption of the downstream don’t have the buyer power. With the rise of the world’s large retail industry, the positions of manufacturers and retailers have changed in the industrial chain. The buy power of the retailers in intermediate input market is more and more strong. The retailers’buyer power forced the producers lower the wholesale prices, and finally the buyer can get more profit. Based on the discussion of the buyer power, the iron ore market, the retail industry, pharmaceutical industry, etc get much attention. But most of the researches are based on the vertical relationship. For the iron ore market, only on the vertical relationship is not enough and not so good for actual situations. In fact, the horizontal competition not only effects enterprise competitiveness but also has a great influence on the buyer power. How the horizontal competition of the downstream effect the buyer power becomes a new perspective. Base on the background, this article use the iron ore market as an example to study how the horizontal competition between steel enterprises influence the buyer power.Therefore, after refer to the previous studies, this paper based on the perspective of the horizontal competition, constructed the theory model framework for the iron ore market by Hotelling model. The paper concerned how the horizontal competition between the steel enterprises affects the buyer power through the market constraints. After that, the paper gave different ways to enhance the buyer forces. And with China’s steel enterprises as an instance, it verified the model analysis conclusions. Keep the horizontal competitive advantage can improve the buyer power of the steel enterprises.