Does the Acquisition of Mines by Firms in Resource-importing Countries Decrease Resource Prices?

Keisaku Higashida, Tamaki Morita, Shunsuke Managi and Yasuhiro Takarada

Discussion papers from Research Institute of Economy, Trade and Industry (RIETI)

Abstract: This paper examines both theoretically and empirically the effects of the acquisition of mines by firms in resource-importing countries on resource prices. In the theoretical part, we consider a simple two-period model. We demonstrate that the acquisition of mines may increase either present or future resource prices. This implies that the consumption of resources in either period may decrease. Strategic behavior of a resource-mining firm, demand for final goods, and extraction costs play key roles. In the empirical part, using a dynamic panel model and oil price data, we estimate the effect of the acquisition of mines on resource prices. We find that prices in the present period increase, while those in the future period decrease.

Pages: 33 pages
Date: 2013-09
New Economics Papers: this item is included in nep-bec and nep-ene
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Persistent link: https://EconPapers.repec.org/RePEc:eti:dpaper:13073

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