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The effect of recycling over a mining oligopoly

Author

Listed:
  • Sylvain Sourisseau

    (ADEME - French Agency of Environment and Energy Management, University of Paris Saclay - Evry Val d’Essonne, TEPP-CNRS, Department of Economics)

  • Jean De Beir

    (University of Paris Saclay - Evry Val d’Essonne, TEPP-CNRS, Department of Economics)

  • Thai Ha Huy

    (University of Paris Saclay - Evry Val d’Essonne, TEPP-CNRS, Department of Economics)

Abstract

In a view of switching from a linear to a circular economy, recycling plays a fundamental role. While the literature on the effect of recycling over the mining activity is focused on a monopoly, here we only deal with a mining oligopoly, which better reflects realistic market conditions. Our results show a decreasing mining output with the presence of recycling and unexpectidly a greater market power. Nevertheless, we point out the need for recylers to benefit from a minimum recycling efficiency technology to enter the market. A second technologic threshold also allows the recyclers to lower the oligopolistic market power. In this case of extreme foreclosure, since the mining output rises with the number of firms, a cooperation is necessary to prevent the entry of recycling. In terms of strategy, an horizontal integration could strengthen their position in the upstream industrial process and would also represent a good way to step forward to the so-called circular economy.

Suggested Citation

  • Sylvain Sourisseau & Jean De Beir & Thai Ha Huy, 2017. "The effect of recycling over a mining oligopoly," Documents de recherche 17-05, Centre d'Études des Politiques Économiques (EPEE), Université d'Evry Val d'Essonne.
    • Handle: RePEc:eve:wpaper:17-05
    as

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    References listed on IDEAS

    as
    1. Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, April.
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    3. Swan, Peter L, 1980. "Alcoa: The Influence of Recycling on Monopoly Power," Journal of Political Economy, University of Chicago Press, vol. 88(1), pages 76-99, February.
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    5. Grant, Darren, 1999. "Recycling and market power: A more general model and re-evaluation of the evidence1," International Journal of Industrial Organization, Elsevier, vol. 17(1), pages 59-80, January.
    6. Géarard Gaudet & Ngo Van Long, 1996. "Vertical Integration, Foreclosure, and profits in the Presence of Double Marginalization," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 5(3), pages 409-432, September.
    7. Gérard Gaudet & Ngo Van Long, 2003. "Recycling Redux: A Nash–Cournot Approach," The Japanese Economic Review, Japanese Economic Association, vol. 54(4), pages 409-419, December.
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    10. Martin, Robert E, 1982. "Monopoly Power and the Recycling of Raw Materials," Journal of Industrial Economics, Wiley Blackwell, vol. 30(4), pages 405-419, June.
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    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Knut Einar Rosendahl & Diana Roa Rubiano, 2019. "How Effective is Lithium Recycling as a Remedy for Resource Scarcity?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 74(3), pages 985-1010, November.

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    More about this item

    Keywords

    oligopoly; market power; recycling; Alcoa case; iron and steel industry;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L72 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Mining, Extraction, and Refining: Other Nonrenewable Resources
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • 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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