China's Virtual Monopoly of Rare Earth Elements by Roland Howanietz

Author:Roland Howanietz [Howanietz, Roland]
Language: eng
Format: epub
Tags: Social Science, Ethnic Studies, General, Regional Studies
ISBN: 9781351109901
Google: Vz33DwAAQBAJ
Publisher: Routledge
Published: 2018-06-12T05:20:03+00:00

The rate of extraction will initially be lower and the rate of increase of the price will be slower in the monopolistic market than in the competitive market, which resembles the same pseudo-conservationist pattern as in the basic Hotelling rule. In both cases, extraction rates will be initially relatively low but increase as the elasticity increases over time in order to maintain the growth of the price path (Stiglitz, 1976, p. 657).

The second deviation is the increase of demand for the resource. This could happen due to newly found fields of applications for the natural resource, the growth of the population or rising real incomes, for example. As result of the increasing demand, the demand curve shifts outwards. On the original optimal price path, this would lead to higher rates of extraction so that the resource would be exhausted before the choke-off price is reached. Therefore, increased net prices are required to reduce the demand in every period in order to meet the optimality condition that the price is equal to the choke-off price at the date of exhaustion. The time until exhaustion is also shortened (Perman et al., 2011, p. 525). In the case of a sudden demand decrease for the resource, the solution would be analogous. The demand curve shifts inwards; net prices are required to decrease in order to increase the demand in every period. The time until exhaustion is lengthened.

Download

Copyright Disclaimer:
This site does not store any files on its server. We only index and link to content provided by other sites. Please contact the content providers to delete copyright contents if any and email us, we'll remove relevant links or contents immediately.