Did China׳s rare earth export policies work? — Empirical evidence from USA and Japan

Lu Zhang, Qing Guo, Junbiao Zhang, Yong Huang and Tao Xiong

Resources Policy, 2015, vol. 43, issue C, 82-90

Abstract: Rare earth elements are a strategic non-renewable resource. China is the largest producer and exporter of rare earth products. However, China has failed in the past to attain pricing power and large profits in spite of its monopolistic status. Over the past decade, China has issued and readjusted a series of policies for rare earth elements. Did China׳s rare earth export policies work? To answer this question, we have conducted an empirical study using the Lerner index and BP neural network. The results indicate that (1) the market power and price sensitivity of China׳s rare earth products have increased dramatically, indicating that China׳s export policies have exerted significant effects, and (2) the differences and changes in the market power and price sensitivity in different policy periods and in different countries verify the validity of China׳s export restriction policies on rare earth products. Moreover, we suggest that for the sustainable improvement of pricing power, China׳s focus could shift from controlling exports to controlling production, such as carrying out mergers in the industry to form large rare earth producers.

Keywords: Rare earth products; International trade; Policy effects; Market power; BP neural networks algorithm (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jrpoli:v:43:y:2015:i:c:p:82-90

DOI: 10.1016/j.resourpol.2014.11.007

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