• Resources Science
  • Vol. 42, Issue 8, 1604 (2020)
Zhe YOU1、3, Jinhua Cheng2、3、*, Tong WU1, and Ran WANG2、3
Author Affiliations
  • 1School of Law and Business, Wuhan Institute of Technology, Wuhan 430205, China
  • 2ddr-line>2. School of Economics & Management, China University of Geosciences (Wuhan), Wuhan 430074, China
  • 3Research Center of Resource and Environmental Economics, China University of Geosciences (Wuhan), Wuhan 430074, China
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    DOI: 10.18402/resci.2020.08.14 Cite this Article
    Zhe YOU, Jinhua Cheng, Tong WU, Ran WANG. Influence of pricing mechanism transferring on iron ore price volatility[J]. Resources Science, 2020, 42(8): 1604 Copy Citation Text show less


    China is the largest importing and consuming country of iron ore in the world. However, it has faced the problem of lack of pricing power for a long time. Obtaining market pricing power through the reform of pricing mechanism is a key scientific issue for ensuring the security of China’s resource supply. Using the regression discontinuity model and monthly data from July 2005 to March 2019, this study conducted an empirical analysis from the perspective of pricing mechanism transition, to explore the causal relationship between the reform of short-term pricing mechanism and the fluctuation of import price of iron ore in China. The results reveal that the introduction of short-term pricing mechanism is closely related to the fluctuation of domestic imported iron ore price and it can effectively restrain the dramatic rise of the price in the short term, while the reform of short-term pricing mechanism has no convincing negative relationship with the fluctuation of international iron ore price. Meanwhile, endogenous factors had slight influence on iron ore import price during the process of pricing mechanism reform. Based on these conclusions, this article suggests that the reform of short-term pricing mechanism should be strengthened continuously. In order to increase the pricing power in the negotiation with iron ore suppliers, herd effect should play a role in the reform of China’s short-term iron ore pricing mechanism. China should flexibly adjust the pricing mechanism according to changes in the international market in order to enhance the pricing power on the market.