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Evaluating criticality of strategic metals: Are the Herfindahl–Hirschman Index and usual concentration thresholds still relevant?

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  • Bucciarelli, Pauline
  • Hache, Emmanuel
  • Mignon, Valérie

Abstract

This paper aims to evaluate the criticality of strategic metals by (i) investigating the validity of the Herfindahl–Hirschman Index (HHI) for assessing the supply risk aspect of criticality and (ii) determining an appropriate threshold for using this indicator in the context of criticality studies. Relying on a large panel of 33 strategic metals over the 1995–2021 period, our findings show that the variation of HHI has more impact on metal prices at lower HHI levels and question the existence of a threshold that clearly distinguishes high-risk markets from less risky ones based on their concentration levels. Overall, we show that using the HHI as a supply risk indicator, especially in conjunction with a threshold, may result in underestimating risks in less concentrated markets.

Suggested Citation

  • Bucciarelli, Pauline & Hache, Emmanuel & Mignon, Valérie, 2025. "Evaluating criticality of strategic metals: Are the Herfindahl–Hirschman Index and usual concentration thresholds still relevant?," Energy Economics, Elsevier, vol. 143(C).
    • Handle: RePEc:eee:eneeco:v:143:y:2025:i:c:s0140988325000313
    DOI: 10.1016/j.eneco.2025.108208
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    Keywords

    Strategic metals; Criticality; Herfindahl–Hirschman index; Metal prices; Panel regression;
    All these keywords.

    JEL classification:

    • Q02 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Commodity Market
    • Q34 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Natural Resources and Domestic and International Conflicts
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C24 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Truncated and Censored Models; Switching Regression Models; Threshold Regression Models

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