China’s rare earth policy: Prosperity maximization or great power geoeconomics?

Kai A. Konrad

Working Papers from Max Planck Institute for Tax Law and Public Finance

Abstract: An industrial economics analysis of China’s quasi-monopoly on refined rare earth materials shows: even if China strictly maximizes national prosperity and abstains from geopolitical power play, a significant price differential emerges between the export price and the price for domestic users. The price differential itself is not evidence of geopolitical intentions. However, this equilibrium price gap widens if we assume that China views itself as contesting in a geopolitical, tournament-like situation against the United States. These two results are derived within the framework of a tournament model that imbeds the characteristics of a dominant supplier with a fringe - market, but adds geopolitical goals to the dominant supplier’s objective.

Keywords: Rare earth; monopoly power; China; geopolitics; strategic autonomy; political vulnerability (search for similar items in EconPapers)
JEL-codes: F13 F51 L72 Q34 (search for similar items in EconPapers)
Pages: 19
Date: 2026-06-01
New Economics Papers: this item is included in nep-ene
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