Does the Acquisition of Mines Benefit Resource-Importing Countries?

Keisaku Higashida and Yasuhiro Takarada

No 86, Discussion Paper Series from School of Economics, Kwansei Gakuin University

Abstract: Using a simple two-period model, this paper examines the effects of the acquisition of mines/resources by a final goods producer located in a resource-importing country on resource prices in both the first (the present) and second (the future) periods, profits of firms, and welfare. We find that an increase in the mines owned by a final goods producer can increase the resource price in the first period and/or, interestingly, the second period. The strategic behavior of a resource-extracting firm located in a resource-exporting country produces this result. Whether the resource price increases in either period depends on the demand structure for the final goods and the resource supply condition of the final goods producer which owns the mines in the second period. We also consider three extended situations: joint exploration, entry of speculators, and the case of a non-committed investment.

Keywords: Acquisition of mines; resource exploitation; governments' support (search for similar items in EconPapers)
JEL-codes: F12 F18 Q31 Q34 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2012-03, Revised 2012-03
New Economics Papers: this item is included in nep-env and nep-int
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http://192.218.163.163/RePEc/pdf/kgdp86.pdf First version, 2012 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:kgu:wpaper:86

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