Empirical study on Chinese coke export market power
| DOI | https://doi.org/10.1108/17544400910966103 |
| Date | 19 June 2009 |
| Pages | 131-141 |
| Published date | 19 June 2009 |
| Author | Zesheng Sun,Xiangdong Xu |
| Subject Matter | Economics |
Chinese coke
export market
power
131
Journal of Chinese Economic and
Foreign Trade Studies
Vol. 2 No. 2, 2009
pp. 131-141
#Emerald Group Publishing Limited
1754-4408
DOI 10.1108/17544400910966103
Empirical study on Chinese coke
export market power
Zesheng Sun and Xiangdong Xu
School of Economics and Management,
Zhejiang University of Science and Technology,
Hangzhou, People’s Republic of China
Abstract
Purpose – The purpose of this paper is to empirically study whether China could achieve strong
export market power considering its highly decentralized coke production and trade.
Design/methodology/approach – By using time series data, this paper econometrically estimates
the coke export market power with the Hall model; then, through analyzing micro trade data and
public policy, tries to explain the co-existing dilemma of China’s highly decentralized coke
production/export and its strong market power in the world market; lastly, by using Stigler’s survival
technique, it explores the optimum size of China’s coke production and export.
Findings – The paper finds that the market power of Chinese coke export is quite strong, even if its
micro market structure is highly decentralized; the main explanation for the expanding of China’s
coke export market power comes from its oligopolistic position in the world coke market, its strong
industry policy and trade policy restriction. Also it is found that the optimum size in the coke
industry should be the market share below 0.5 percent, or in 1-10 percent, while other market sizes
are of diseconomies of scale.
Practical implications – Such findings provide evidence for China’s policy adjustment regarding
maintaining strong coke export market power, while eliminating economic distortions and negative
production externality.
Originality/value – This paper highlights the co-existing issues of micro competitive structure and
nationally oligopolistic position in an industry. This study is the first try to combine market power
and economies of scale, through empirical analysis and optimum size estimation, to generate
implications for optimal government public policy.
Keywords China, Coal technology, Export markets, Market economy
Paper type Research paper
1. Introduction
According to the International Trade Commission, China has been the world’s biggest
coke producer and exporter during the past ten years, which means that China owns an
oligopolistic position in the world coke market. But China’s domestic coke industry is
highly decentralized because of well-dispersed coal reserves and production. In China,
the resources of coking coal are widely distributed in almost all provinces, for example,
the Shanxi Province, which holds the biggest reserves, had more than 1,500 coke
producers in 1995. Because of high pollution and high energy consumption of the coke
industry, China made big adjustments in coke industrial and trade policies in order to
reduce coke production and export. But in 2007, there were still more than 7,066 large
and medium-sized coal mines and more than 10,000 small-sized coal mines. The latter
produces more than 38 percent of the total production. In 2007, there were
approximately 1,400 producers in China’s coke industry, located in 28 provinces and
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The authors would like to thank the anonymous reviewer and attendants of CSIT 2008 in
Nankai University, Tianjin for constructive suggestions, and also the National Nature Science
Fund of China, Humanities & Social Science Fund of Ministry of Education of China
(08JC790098) and Social Science Fund of Zhejiang Province (08CGJJ008YBX) for financial
support. Any remaining errors are those of the autho rs.
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