Economics at your fingertips  

Vertical vs. horizontal integration: Game analysis for the rare earth industrial integration in China

Aiping Han, Jianping Ge and Yalin Lei

Resources Policy, 2016, vol. 50, issue C, 149-159

Abstract: Rare earths are important strategic mineral resources and have been widely used for economic development and national security. The Chinese government has carried out some policies to promote the process of rare earth industrial integration. Our study constructed a two-stage game-theoretic model to analyze the industrial integration tendency of rare earth firms. Three integration scenarios have been established, including no integration, horizontal integration between upstream firms and vertical integration between upstream and downstream firms. The results show that firms and the Chinese government prefer different modes of rare earth industry integration. For rare earths firms, they would like to carry out horizontal integration to maximize their profits, while the Chinese government would encourage the vertical integration between upstream and downstream firms to realize the maximization of social welfare. Finally, the Chinese government would like to make out some policies to guide the rare earth firms to implement vertical rather than horizontal integration.

Keywords: Rare earths; Game-theoretic model; Industrial integration; Social welfare; China (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2) Track citations by RSS feed

Downloads: (external link)
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

DOI: 10.1016/j.resourpol.2016.09.006

Access Statistics for this article

Resources Policy is currently edited by R. G. Eggert

More articles in Resources Policy from Elsevier
Bibliographic data for series maintained by Haili He ().

Page updated 2020-05-02
Handle: RePEc:eee:jrpoli:v:50:y:2016:i:c:p:149-159