Re: Greens add to Greenhouse gasses

On 11/29/2012 6:38 PM, Dan Minette wrote:
>   They used the low price tactic to drive out virtually all
> other rare earth suppliers a bit over a decade ago, and are now in a
> position where the startup costs are high for other countries, and any
> country with pollution regulations would have a hard time competing.  So,
> using this tactic, they could keep a monopoly, once they established it.
Well, I just noted that a new technology has come along that replaces 
much of the use of rare earth elements (it had to do with electric 
motors). This is one of the reasons you have to be slightly skeptical 
about attempts to use predatory pricing to create monopolies. The very 
act of raising prices creates a strong incentive for substitutes, among 
other things. I just did a Google search on "rare earth substitutes" 
that brought back a number of recent articles about how rare earth 
prices were falling as a result of manufacturers finding substitutes, 
and other articles about how manufacturers are finding those substitutes.

Now, I cannot say exactly how this will play out since predictions are 
hard, especially when they are about the future. ;) But there is a 
concept in economics called "hysteresis" that says that changes once 
made are sometimes hard to reverse. A great example of this was the 
automobile market in the 1970s. When oil prices rose, consumers went 
looking for fuel-efficient autos. When U.S. manufacturers could not meet 
this demand, they turned to the hitherto ignored Japanese cars. This led 
them to discover a previously unknown fact, that those cars were of 
higher quality than American cars. As a result, even when oil prices 
fell, the market share of Japanese autos did not fall back to its 
previous level. A "permanent" change had occurred in consumers' 
preferences. It is at least conceivable to me that the research into 
alternatives to rare earths will result in a "permanent" fall in demand 
for them.

Regards,

-- 
Kevin B. O'Brien
[email protected]
A damsel with a dulcimer in a vision once I saw.