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The development of the market for rare earth elements: Insights from economic theory

Dominik Schlinkert and Karl Gerald van den Boogaart

Resources Policy, 2015, vol. 46, issue P2, 272-280

Abstract: In this paper, a clear and structured economic model is introduced to illustrate complex past and future developments of the market for rare earth elements (REE). The model consists of a sequence of four supply and demand models that give explanations how the mining and separation step of the REE value chain could concentrate in China. Furthermore, the sequence allows giving a coherent scenario for the future developments of the REE market. According to this scenario, the market could transform into an at least oligopoly due to a growing market demand. The validity of this scenario is discussed and evaluated from the perspective of western countries, investors and China. Additionally, a scenario, based on the models, of a propagating monopoly along the value chain is discussed. Finally, suggestions are made for western governments to promote the transformation and lead it to a positive outcome.

Keywords: Rare earth elements; Economic model; Monopoly; Value chain (search for similar items in EconPapers)
Date: 2015
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