Research on the Influence of Bounded Rationality and Product Differentiation on the Stability of Steel Industry Market

Abstract

At present, the problems of homogenization and low quality in China’s iron and steel industry are particularly prominent and the ability of the enterprises to cope with change is insufficient. Adopting product differentiation strategy and dynamic adjustment strategy can allow steel enterprises and the industry to better adapt to future changes. By introducing the product differentiation degree (substitution coefficient) and the bounded rationality strategy to simulate these two strategic means, this paper constructs an extended two-stage dynamic game model to analyse the dynamic game scenarios and steel market stability in China. As new findings, we report the following: (1) The system is more likely to fall into an unbalanced state when multiple enterprises adopt the policy of dynamic output adjustment simultaneously. (2) Enterprises with large output and small output have different output adjustment policies. When enterprises with big-scale output adopt a bit larger adjustment policies, enterprises with small output will be strongly impacted, and the available adjustment space will be sharply compressed. (3) The gradual increase in the difference between products reduces the stability of the market. (4) When product differentiation and bounded rationality strategies coexist, the steel market may fall into an unbalanced state when the degree of product difference increases excessively and the enterprise adopts more drastic output adjustment policies. Therefore, there are pros and cons to product differentiation strategy and bounded rationality adjustment strategy. When each steel oligopoly enterprise formulates a production plan, it needs to comprehensively consider the output changes of the other enterprises and carefully weigh the strategic issues.

Research on the Impact of Output Adjustment Strategy and Carbon Trading Policy on the Response, Stability and Complexity of Steel Market under the Dynamic Game

“…According to the research of Duan et al [16,23,50] and the scenario settings in Section 3.2, this part will analyze these three time points. The functional relationships and parameters in Table 4 have referred to the previous research results (Duan et al [16,23,50], Färe et al [61], Lee et al [62], and Guenno and Tiezzi [63]).…”

“…Ji [36] Electricity industry and electricity market Sun and Ma [37] Steel industry and steel market Tu [38] Power and renewable resources industry Dang and Hong [39] Glass substrates industry Tan and Liang [40] Coal industry and coal market Di et al [41,42] Transportation planning Liu [43] Carbon trade market Yu [44] Transportation industry Ding et al [45] Electricity system Zhang [46] Carbon trade market Sang, Xie and Wang [47] Ship-building industry Zhang et al [48] Remanufacturing industry Wu [49] Electricity market Duan et al [50] Steel industry Fan et al [51] Coal industry Ma et al [52] Vehicle industry Huang et al [53] Construction industry Li et al [54] Construction industry…”

“…According to the researcher's previous research [16,23,50], in this paper, the main research focus includes the government and six regions. In this paper, subscript 1 represents North China, subscript 2 represents Northeast China, subscript 3 represents East China, subscript 4 represents South Central China, subscript 5 represents Southwest China, and subscript 6 represents Northwest China.…”

“…In this paper, subscript 1 represents North China, subscript 2 represents Northeast China, subscript 3 represents East China, subscript 4 represents South Central China, subscript 5 represents Southwest China, and subscript 6 represents Northwest China. Combined with previous research [16,23,50], we reintegrated the parameters required in this paper, which are shown in Table 3.…”

Research on the applicability and impact of CO2 emission reduction policies on China’s steel industry

“…According to the traditional Chinese geographical division method and references (Duan et al, 2019;Duan et al, 2020), the main research focus of this paper encompasses the government and six regions1. The regional steel industry data are regarded as a steel enterprise entity.…”