Study On Rare-earth Prices Determination And The Optimal Extraction Paths

China is the most important country of the world in rare-earth’s production, consumption and export, however our country does not control the international rare-earth price, and the changes of price are different at home and abroad. The paper takes rare-earth’s international and domestic markets apart, and discusses the influencing factors of rare-earth prices from supply, demand and policy. Supply is still greater than demand in our country. The lagging effect of policies and the weak executive power are responsible for the consequence. America, Japan and other countries have the monopoly power in the international rare-earth market. Because of the important strategic position of rare-earth, rare-earth price is influenced by some other factors besides supply and demand. This paper establishes rare-earth trade game model between China and America, obtaining the rare-earth price range. Because the control of rare-earth industry is more and more strict, rare-earth pricing power strengthens gradually. This paper describes the development and market structure evolutions of rare-earth industry, dividing the rare-earth market structure process into different stages from the perspective of prices, and studying the optimal extraction paths when international and domestic market structures are completely competitive, the international market structure is in monopoly and domestic market structure is completely competitive, the international market structure is completely competitive and domestic market is in monopoly, international and domestic market structures are in monopoly. Finally the paper puts forward the corresponding suggestions from improving rare-earth international pricing, protecting rare-earth resources, and reducing rare-earth supply, comes up with using mandatory and market regulations in promoting the development of rare-earth industry in our country, and strengthens the executive power at the same time.