Producer homogeneity,heightened uncertainty and mineral market rigidity |
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| Institution: | 1. Energy & Poverty Research Group, UQ Energy Initiative, The University of Queensland, St Lucia 4072, Queensland, Australia;2. School of Social Science, The University of Queensland, St Lucia 4072, Queensland, Australia;1. Graduate School of Environmental Studies, Tohoku University, Japan;2. Institute for Economy and the Environment, University of St. Gallen, Switzerland;3. Faculty of Business and Economics, University of Basel, Switzerland;4. Department of Environmental Social Sciences, Swiss Federal Institute of Aquatic Science and Technology (Eawag), Switzerland;5. Center for Northeast Asian Studies, Tohoku University, Japan;1. Graduate School of Environmental Studies, Tohoku University, Miyagi Prefecture, Japan;2. Department of Geography, Salem State University, Massachusetts, USA;3. Center for Northeast Asian Studies, Tohoku University, Miyagi Prefecture, Japan;4. Graduate School of Arts and Letters, Tohoku University, Miyagi Prefecture, Japan;1. Institute of Chemical Technology, Freiberg University of Mining and Technology, Leipziger Straße 29, 09599 Freiberg, Germany;2. Institute of Industrial Management, Production Management and Logistics, Freiberg University of Mining and Technology, Schlossplatz 1, 09599 Freiberg, Germany |
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| Abstract: | Minerals/metals markets are characterized by lumpy investments which impart a bias towards rigidity. That rigidity increased in the 1970s owing to heightened global economic uncertainty. The unexpected slowdown in global metals demand was a fundamental cause of the heightened uncertainty, but adjustment to it was hampered by a simultaneous reduction in the homogeneity of producers. The two main causes of reduced producer homogeneity were: the emergence of unstable and sizable differences in producer competitiveness and the proliferation of producers. A reduction in minerals market rigidity requires two sets of conditions. First, restoration of greater stability in global economic growth, inflation, energy prices and exchange rates; and second, an increase in producer homogeneity through the encouragement of joint ventures. Increased producer homogeneity facilitates expansion where investment is lumpy and since this improves the efficiency of capital it may be socially justified provided it is not accompanied by excess profits. |
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