An article in The Economist XXXXXXXXXXdescribes negotiations between China and its main foreign suppliers of iron ore. Early in the process, China’s largest steelmaker, Baosteel, had struck a deal...

An article in The Economist (2008) describes negotiations between China and its main foreign suppliers of iron ore. Early in the process, China’s largest steelmaker, Baosteel, had struck a deal with Vale, a Brazilian iron ore producer. However, at the time the article was written, a deal was yet to be reached with the two major Australian suppliers of iron ore, Rio Tinto and BHP. At the same time, the Australian suppliers were finding themselves unable to obtain import licences necessary to sell iron ore onto China’s spot market, where iron ore was trading at a price two to three times above the contract price. Yet, shipments from Brazil were having no trouble obtaining import licences. a Consider the bargaining over iron-ore prices between Australian suppliers and Chinese steel producers as a strategic situation. Who would you say are the main players in the game? What are the main choices of actions that each of the players must take? How would you represent the order of actions? b What would the Chinese Government be seeking to achieve by preventing Australian iron ore suppliers from selling in China’s spot market? What are the main costs to them of restricting supply in this way? How might the slowdown in industrial demand for iron ore in China affect this trade-off?