EconPapers    
Economics at your fingertips  
 

Market demand dynamic induced mechanism in China's steel industry

Wei Sun, Kaiqiang Dong and Tianyu Zhao

Resources Policy, 2017, vol. 51, issue C, 13-21

Abstract: Using the example of iron and steel industry, this paper aims to reveal the market demand effect and the mechanism on investment and capacity allocation. Based on building the theoretical model containing demand dynamic gap with the quarterly data of iron and steel industry since 2004, time-varying parameter model is used to empirically test the asymmetric adjustment mechanism of the productivity allocation under demand inducing and the effect of policies. The results show that obvious asymmetric features in the formulating and withdrawing phases of iron and steel productivity caused by inducing demand dynamics and its asymmetric periodic motion; self-correction mechanism of productivity under the situation of frequent switching between supply and demand is limited. Once the deviation from the equilibrium level of production capacity exceeds its own threshold adjustment mechanism, it is unable to restore equilibrium through market regulation, and leads to the extraordinary "trial and error" cost; further takes the correlation mechanism among industries as the breakthrough point to do more empirical tests of the effects of downstream industry dynamic demand on the steel industry capacity. It also indicates that the development of the real estate industry when Chinese economic environment is good directly introduces the steel industry capacity allocation, Grasping accurately the above rules is the premise of achieving market’s decisive role in the resource allocating process while giving full play to government function.

Keywords: Market inducement; Non-symmetric effect; Capacity adjustment mechanism; Time-varying parameter model; Industry correlation mechanism (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0301420716303440
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jrpoli:v:51:y:2017:i:c:p:13-21

DOI: 10.1016/j.resourpol.2016.10.011

Access Statistics for this article

Resources Policy is currently edited by R. G. Eggert

More articles in Resources Policy from Elsevier
Bibliographic data for series maintained by Catherine Liu ().

 
Page updated 2025-03-19
Handle: RePEc:eee:jrpoli:v:51:y:2017:i:c:p:13-21