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Critical Mineral Depletion and Recycling: From the Perspective of the Cooperation and Open-Loop Competition

Author

Listed:
  • Weihua Ruan

    (Purdue University Northwest, USA)

  • Benteng Zou

    (DEM, Université du Luxembourg)

Abstract

Critical minerals are essential to the success of the transition to clean and sustainable technology. However, critical minerals face supply chain disruption, resource depletion, a lack of recycling technology and minimum demand, which may be increasing over time, at least in the short run. This paper models critical mineral extraction and recycling strategies under international cooperation and open-loop commitment competition. We show that (1) recycling technology can only partially reduce dependence on the virgin supply of critical minerals, given that recycling essentially relies on the accumulated supply from depletable resources; (2) the social planner's Markovian optimal market supply is based on either virgin or recyclable resources, with the more socially desirable being used first; (3) if the recyclable resource is exhausted, the social planner does not have an optimal choice regarding how to exploit the remaining virgin resource; but (4) under open-loop commitment, the two resources can coexist until the virgin resource is exhausted

Suggested Citation

  • Weihua Ruan & Benteng Zou, 2023. "Critical Mineral Depletion and Recycling: From the Perspective of the Cooperation and Open-Loop Competition," DEM Discussion Paper Series 23-03, Department of Economics at the University of Luxembourg.
    • Handle: RePEc:luc:wpaper:23-03
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    File URL: http://hdl.handle.net/10993/55173
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    More about this item

    Keywords

    critical mineral; recycling; import and export; differential game.;
    All these keywords.

    JEL classification:

    • Q34 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Natural Resources and Domestic and International Conflicts
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • L72 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Mining, Extraction, and Refining: Other Nonrenewable Resources
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies

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