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An introduction to the economics of rare earths

Author

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  • Bartekova, E.

    (UNU-MERIT)

Abstract

The aim of this paper is to examine the supply risk of rare earths and its impact on low carbon technologies deployment. Bringing together seemingly disconnected strands of scientific literature, this multidisciplinary approach allows to provide an overarching overview of the economics of rare earths. In terms of supply risk, as opposed to the common belief, it is not Chinas dominant position per se, but its industrial policies which distort the rare earths market. On the demand side, the results of this paper disprove the widespread allegation that availability risk impedes deployment of offshore wind. Contrary to this, a potential supply shortage of rare earths would disrupt the further development of the automotive industry and its electrification. Ultimately, uncertainty about volatile prices and threat of supply shortages induce manufacturers to shift away from technologies containing rare earths, and thus render innovation in these economically nonviable.

Suggested Citation

  • Bartekova, E., 2014. "An introduction to the economics of rare earths," MERIT Working Papers 2014-043, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
  • Handle: RePEc:unm:unumer:2014043
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    File URL: https://unu-merit.nl/publications/wppdf/2014/wp2014-043.pdf
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    Citations

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    Cited by:

    1. Martin David & Florian Koch, 2019. "“Smart Is Not Smart Enough!” Anticipating Critical Raw Material Use in Smart City Concepts: The Example of Smart Grids," Sustainability, MDPI, vol. 11(16), pages 1-11, August.
    2. Barteková, Eva & Kemp, René, 2016. "National strategies for securing a stable supply of rare earths in different world regions," Resources Policy, Elsevier, vol. 49(C), pages 153-164.

    More about this item

    Keywords

    Resources economics; rare earths; mining; supply; pricing; market structure; innovation; wind energy; renewable energy; China;
    All these keywords.

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L72 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Mining, Extraction, and Refining: Other Nonrenewable Resources
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • Q31 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Demand and Supply; Prices
    • Q37 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Issues in International Trade
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling

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