Article ID Journal Published Year Pages File Type
986137 Resources Policy 2014 10 Pages PDF
Abstract

•Optimization model to determine the extraction behavior for by-products.•Theoretical prediction of a negative relationship between primary and by-products.•Empirical observation of the theoretical derived relations in some cases.

We will examine price dependencies between primary products and co-products from metal markets. First, we develop an optimization model to determine the profit-maximizing extraction behavior of mining companies. With this model, we analyze how the companies optimally react to exogenous demand shocks on the metal markets, and how the prices of metallic primary products and their co-products are related to each other. This approach enables us to determine the basic conditions leading to price relationships. Second, we validate our theoretical findings on monthly metal prices from June 2009 to January 2013. We apply a linear regression model to analyze the price relationships of the primary products and their co-products and finally compare the results of our analysis to our model forecasts.

Related Topics
Physical Sciences and Engineering Earth and Planetary Sciences Economic Geology
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