Iron-steel the national economy and industrialisation of the country.

 

Iron-steel
industry is a leading sector for growing of the national economy and
industrialisation of the country. When the relationship between the
improvements that are observed in the iron-steel industry and the development
process, it can bee seen that iron-steel products play a big role in the
progress of subsectors related to iron-steel industry.

 

1)    Structural Assumptions

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i.        
Number
of Sellers

The number of sellers in the iron-steel industry is at
the amount that can be counted because there are some substantial barriers to
entry to the market. The fundamental barrier that blocks the entry to
iron-steel industry for outer firms is that this industry requires a huge
amount of investment included heavy industry machines and equipment for
production of iron and steel from the iron ore.

 

   
ii.        
Cost
Conditions

In the short-run, compared with the all of the firms
in Europe, firms in Turkey have the lowest cost of
production of iron and steel. ?

  iii.        
Number
of buyers

There are many buyers for the iron-steel industry. The
iron-steel industry contributes to almost every sector in the market. For some
sectors such as furniture, household appliances, construction, and automotive,
iron-steel is used as raw material for production; whereas for some sectors
such as food, iron-steel is used in the investment goods in that sector. In
addition, iron-steel is sold directly to overseas companies by iron-steel
industry companies in Turkey.

  
iv.        
Demand
Conditions

Since the products from iron-steel industry are
substitute for imported products, importation of these goods is low.

 

 

2)    Behavioural Assumptions

 

     
i.        
Objective
Function

The goals, in terms of exportation in
2023, for the subsectors of iron-steel industry can be listed as long product (USD
23.6 billion), flat product (USD 15.7 billion), by products (USD 3.9 billion), pipe
(USD 7.9 billion), and construction parts (USD 3.9 billion). ?Also, each of
every firm of the iron-steel industry in Turkish market aims to maximize its
profit in the short-run. Moreover, solving the problems that arise from the
disequilibrium of supply-demand curve is a short-run objective.

     
i.        
Strategic
Variable

In the iron-steel industry, many strategic
variables can be observes. Firstly, there can be listed a variety of
sub-products such as slab, billet, flat steel, long steel, qualified steel, and
pipes. Secondly, the variables are terms of distribution are sea, air, rail,
and road. When
thinking of global competition, the variables are technological infrastructure,
system of education, the relationship between public and private sector, and
economic policy.

   
ii.        
Expectation
of Rivals’ Reactions

Since the leader firm that have a big market share in the iron-steel
industry has a big impact to market when it makes a change in its strategic
plan, the smaller firms usually follow and apply the changes that the leader
firm make.

 

In the light of all these
characteristics of iron-steel industry, it can be understood that the market
structure of iron-steel industry is an oligopoly.

 

References:

Investment
Support and Promotion Agency of Turkey. (2013, December). The Iron          and Steel Industry in Turkey.

Retrieved from http://www.invest.gov.tr/en-US/infocenter/publications/Documents/IRON-STEEL-INDUSTRY.pdf

 

 

Republic of Turkey Ministry of Economy. (2017). The
Sector Analysis Iron-Steel Industry. Retrieved from https://www.ekonomi.gov.tr/portal/content/conn/UCM/uuid/dDocName:EK-236486