A quadratic programming model of the Appalachian steam coal market
Abstract The authors report on an extension of recent modelling efforts to analyse the Appalachian steam coal market using a programming approach. The background to these modelling efforts is examined first. The particular aspects of the steam coal market to be modelled are then presented and the corresponding coal model described. Empirical results are analysed for the 1973 base solution and then compared to alternative solutions embodying variations in the parametric structure. Conclusions are drawn regarding potential policy applications.
Market Structure Scenarios in International Steam Coal Trade
The seaborne steam coal market changed in recent years. Trade volumes grew dynamically, important players emerged and since 2007 prices increased significantly and remained relatively high since then. In this paper we analyse market equilibria in the years 2006 and 2008 by testing for two possible market structure scenarios in this market: perfect competition and an oligopoly setup with major exporters competing in quantities. We conclude from our results that international steam coal trade is not perfectly competitive as there is a large spread between marginal costs and prices and a low capacity utilisation in 2008. Further, trade flows are generally more diversified in reality than in the competitive scenario. However, also the Cournot scenarios fail to accurately explain real market outcomes. We conclude that only more sophisticated models of strategic behaviour can predict market equilibria in international steam coal trade.
Computer Simulation Modeling
Computer simulation as a research methodology is presented as the intersection of modeling, simulation, and computer analysis. Five component parts of simulation models are identified: input variables, output variables, assumptions, algorithms, and parameters. Computer simulation (CSM) has two primary uses for those interested in the study of organizations or who work within them: theory development and policy planning. The advantages and disadvantages of CSM for each of these purposes are examined and recent examples for each are explored.