The Study Of International Pricing Power Of The Bulk Commodity In Imperfect Information

The reform and opening up policy brings the takeoff of China’s economic, China has become the world’s second largest economy. However, China lacks the pricing power in the international trade of most commodities as the biggest trading economy. This paper selected the typical commodities to analysis the pricing status of China in the commodity trade:oil import receives the differential pricing from the Middle East oil exporters in the high monopoly and high import dependence oil markets; imperfect development of the futures market is one of the main reasons why China’s soybean industry fall; technological backwardness aggravates China’s missing of pricing power in the cotton and corn trade markets; the lack of bargaining power in negotiating leads to the rising of China’s iron import price. Commodity is the basic material of the national economy, rising commodity import prices will lead to inflation of the national economy, the violently fluctuation of commodity price may damage the development of domestic industry, the lack of pricing power in both import and export will make China’s trade conditions worsening. The missing of pricing power in commodity trade has harmed China’s economic interests and economic security. In recent years, some scholars has pay attetion to the problem of commodity pricing power missing in the international trade. We reviewed the related articals and found that most study of this problem was concentrated in theory analysis and the fewer empirical analysis had some defects, especially in the analysis of the reasons for the lack of pricing power, no study had involved the incomplete information in pricing negotiations. Rubinstein model is an important theoretical model analyzes how can two participants form a balanced result in the bargaining process, this paper builds a bargaining model with incomplete information for the first time to study the rare earths markets, whose assumptions are more likely to meet the real situation in pricing process.The lack of pricing power of Chinese commodity is a complexed issue caused by a variety of factors, the paper takes rare earths industry for example, analysises the reasons why China can not get the pricing power and put forward policy recommendations. China’s lack of pricing power of rare earths has profound roots of reality, we have to make the rare earths exporting price in business negotiations because of the underdevelopped domestic futures market, in the incomplete information bargaining model of rare earths, the patience factors of import and export companies in the bargaining are determined by the supply and demand in international market and market concentration degree of the industry, while the informations are determined by the technical differences, the size of capital and the managing strategies of domestic and foreign companies. Then, the bargaining power is determined by patience factors and informations in the bargaining game model, the one who has higher bargaining power controls the rare earth price.Chinese rare earths exporting has been hovering in the low price because of the underdevelopped futures market, the disorderly competition of domestic companies, the oversupply and the technological backwordness of downstream enterprises, in which China can not achieve the strategic value of rare earths resources. According to the conclusion, China should pay full attention to the lack of pricing power in the international trade of rare earths, and take actions to safeguard the national interests, such as:develop a mature and effective futures market to achieve the financial pricing power; improve the market concentration degree of rare earth industry by establishing corporate alliances; enhance the technical innovation and develop the downstream products of rare earths; carry out strategic trade protection policies and establish a rare earths reserve system; cultivate the rare earth monopolies and a more advantageous international trade mechanism.