Research on Optimal Cut Coal Production Overcapacity Output in Coal-Rich Province of China

Abstract

Recently, global economy is undergoing a structural change. The current world economic structure is mainly characterized by low growth rates in the economy, investment and trade, as well as low coal prices, interest rates and inflation. Overcapacity is a problem in many traditional industries. With the deterioration of overcapacity in coal-rich province of China, how to reduce coal production overcapacity is becoming an urgent problem to be solved. China’s coal market is still under the pressure of excess production capacity, the structural overcapacity has not been completely resolved. The coal industry is highly market-oriented, so the market mechanism plays an important role in the market downturn performance. Based on the Cournot competition model, this paper obtains the optimal cut coal production overcapacity output of coal production enterprises, the scenario of each firm enters the market in normal coal production capacity is analysed, in excess coal production capacity scenario without or with cut coal production overcapacity output. The analysis as show that: optimal cut coal production overcapacity output is the optimal choice for coal production enterprises in coal-rich province of China.