3.3 Module description
Figure 1 shows the structure of our model. Three modules describe the strategies of the importer, exporter and carrier. Importer module represents the utility maximization of the importer when importing the iron ore from exporters. With the perfect information, the inverse demand function is available to the exporter. In exporter module, based on the inverse demand function, the exporter maximizes its profit through determining its trade volume. In carrier module, to maximize its profit, the carrier arranges appropriate ship capacities for the shipment volume in transport flow from the origin ports to the destination ports. To determine the shipment volume, it’s required to know the discharging/loading volume of the port. In the model, we interpose a port selection problem which describes mechanism how the import/export volume are allocated to ports. The inter-sector equilibrium between the trade and shipping sector is ensured by the marketing clearing conditions between the trade volume and the shipment volume. In the following part, we will model the three modules and the allocation problem respectively.