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An adjustment in regulation policies and its effects on market supply: Game analysis for China’s rare earths

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  • Han, Aiping
  • Ge, Jianping
  • Lei, Yalin

Abstract

In this context, this paper analyses the scenario in which China abolishes export restrictions and the resulting effects on firms at home and abroad by building a static game-theoretic model. We also establish a dynamic game-theoretic model with complete information to simulate another scenario that China enhances resource tax and levies an environmental tax and to evaluate its effects on firms in China and abroad in different tax rates. The results show that when abolishing rare earths export restrictions, China's rare earths production and export will increase; while rare earths production, domestic supply and price in foreign country will decrease. Moreover, if the Chinese government enhances resource taxes and levies an environmental tax, the production, domestic supply, and exports of rare earths will decrease in China, whereas the opposite effects will exist in other countries. Furthermore, a reasonable rate for the resource and environmental tax should be identified because it is the key factor affecting the market supply in China and abroad. Finally, several policy implications for the Chinese and other governments are proposed.

Suggested Citation

  • Han, Aiping & Ge, Jianping & Lei, Yalin, 2015. "An adjustment in regulation policies and its effects on market supply: Game analysis for China’s rare earths," Resources Policy, Elsevier, vol. 46(P2), pages 30-42.
    • Handle: RePEc:eee:jrpoli:v:46:y:2015:i:p2:p:30-42
    DOI: 10.1016/j.resourpol.2015.07.007
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    Cited by:

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    2. Jianyun Chen & Wenxing Zhu & Xianping Luo, 2022. "Government Reserve of Rare Earths under Total Quota Management: An Interactive Game between Government and Rare-Earth Firms," Sustainability, MDPI, vol. 14(22), pages 1-19, November.
    3. Yufeng Chen & Biao Zheng, 2019. "What Happens after the Rare Earth Crisis: A Systematic Literature Review," Sustainability, MDPI, vol. 11(5), pages 1-26, March.
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    5. Sabine Langkau & Martin Erdmann, 2021. "Environmental impacts of the future supply of rare earths for magnet applications," Journal of Industrial Ecology, Yale University, vol. 25(4), pages 1034-1050, August.
    6. Nilza Rivera & Juan Ignacio Guzmán & Gustavo Lagos, 2023. "A method to estimate the robustness of the secondary refined copper supply function," Mineral Economics, Springer;Raw Materials Group (RMG);Luleå University of Technology, vol. 36(2), pages 255-277, June.
    7. Ge, Jianping & Lei, Yalin, 2018. "Resource tax on rare earths in China: Policy evolution and market responses," Resources Policy, Elsevier, vol. 59(C), pages 291-297.
    8. Zhü, kèyù & Zhao, Shuang-yao & Yang, Shanlin & Liang, Changyong & Gu, Dongxiao, 2016. "Where is the way for rare earth industry of China: An analysis via ANP-SWOT approach," Resources Policy, Elsevier, vol. 49(C), pages 349-357.
    9. Xibo Wang & Jianping Ge & Wendong Wei & Hanshi Li & Chen Wu & Ge Zhu, 2016. "Spatial Dynamics of the Communities and the Role of Major Countries in the International Rare Earths Trade: A Complex Network Analysis," PLOS ONE, Public Library of Science, vol. 11(5), pages 1-22, May.
    10. Ji, Yuhang & Lei, Yalin & Li, Li & Zhang, An & Wu, Sanmang & Li, Qun, 2021. "Evaluation of the implementation effects and the influencing factors of resource tax in China," Resources Policy, Elsevier, vol. 72(C).
    11. Collins, Benjamin C. & Kumral, Mustafa, 2020. "Game theory for analyzing and improving environmental management in the mining industry," Resources Policy, Elsevier, vol. 69(C).
    12. Chai, Song & Zhang, Zhicong & Ge, Jianping, 2020. "Evolution of environmental policy for China's rare earths: Comparing central and local government policies," Resources Policy, Elsevier, vol. 68(C).
    13. Shigetomi, Yosuke & Nansai, Keisuke & Kagawa, Shigemi & Kondo, Yasushi & Tohno, Susumu, 2017. "Economic and social determinants of global physical flows of critical metals," Resources Policy, Elsevier, vol. 52(C), pages 107-113.
    14. Behnaz Minooei Fard & Willi Semmler & Giovanni Di Bartolomeo, 2023. "Rare Earth Elements: A game between China and the rest of the world," Working Papers in Public Economics 235, University of Rome La Sapienza, Department of Economics and Law.
    15. Hu, Xiaoqian & Sun, Boxue & Wang, Chao & Lim, Ming K. & Wang, Peng & Geng, Xinyi & Yao, Cuiyou & Chen, Wei-Qiang, 2023. "Impacts of China’s exports decline in rare earth primary materials from a trade network-based perspective," Resources Policy, Elsevier, vol. 81(C).
    16. Wang, Xibo & Wei, Wendong & Ge, Jianping & Wu, Bin & Bu, Wei & Li, Jiashuo & Yao, Mingtao & Guan, Qing, 2017. "Embodied rare earths flow between industrial sectors in China: A complex network approach," Resources, Conservation & Recycling, Elsevier, vol. 125(C), pages 363-374.
    17. Chen, Yufeng & Zheng, Biao & Qu, Fang, 2020. "Modeling the nexus of crude oil, new energy and rare earth in China: An asymmetric VAR-BEKK (DCC)-GARCH approach," Resources Policy, Elsevier, vol. 65(C).
    18. Han, Aiping & Ge, Jianping & Lei, Yalin, 2016. "Vertical vs. horizontal integration: Game analysis for the rare earth industrial integration in China," Resources Policy, Elsevier, vol. 50(C), pages 149-159.
    19. Ge, Jianping & Wang, Xibo & Guan, Qing & Li, Weiheng & Zhu, He & Yao, Min, 2016. "World rare earths trade network: Patterns, relations and role characteristics," Resources Policy, Elsevier, vol. 50(C), pages 119-130.
    20. Yi, Jiahui & Dai, Sheng & Cheng, Jinhua & Wu, Qiaosheng & Liu, Kailei, 2021. "Production quota policy in China: Implications for sustainable supply capacity of critical minerals," Resources Policy, Elsevier, vol. 72(C).

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