The Impact of Dodd-Frank and the Huawei Shock on DRC Tin Exports

Haruka Nagamori and Kazuhiko Nishimura

Papers from arXiv.org

Abstract: This paper investigates the structural transformation of the Democratic Republic of the Congo (DRC) tin market induced by the U.S. Dodd-Frank Act. Focusing on the breakdown of the pricing mechanism, we estimate the price elasticity of export demand from 2010 to 2022 using a structural identification strategy that overcomes the lack of reliable unit value data. Our analysis reveals that the regulation effectively destroyed the price mechanism, with demand elasticity dropping to zero. This indicates the formation of a ``captive market'' driven by certification requirements rather than price competitiveness. Crucially, we find strong hysteresis; deregulation alone failed to restore market flexibility. The structural rigidity was finally broken not by policy suspension, but by the 2019 ``Huawei shock,'' an external demand surge that forced supply chain diversification. These findings suggest that conflict mineral regulations can induce monopolistic bottlenecks that are resilient to simple deregulation.

Date: 2025-12
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