Rare earth recycling and remanufacturing: Impacts on oligopoly markets and industry development from a closed-loop supply chain perspective

Abstract

The recycling of rare earth elements (REEs) yielded a dual benefit by alleviating supply constraints and contributing to environmental preservation. Independent recyclers (IRs), upon extracting REEs from waste materials, not only supplied the recovered REEs to the REE conglomerates but also engaged in competitive relationships by remanufacturing REE products. This study established a closed-loop supply framework, allowing the IR flexibly to choose between remanufacturing or direct sales strategies. Using the Cournot model under inequation constraints and real market data, to explores the impact of REE acquisition prices and recycling technologies on the closed-loop supply chain (CLSC) and society. The results indicated that: (1) The recycling mode and technology do not affect market share. Compared to the IR, REE conglomerate exhibit significant monopolistic advantages, occupying at least 85.1% of the market share, which can increase to a maximum of 98% as acquisition prices rise. (2) The acquisition price of recycled REE has an “inverse U-shaped” relationship with the profits of REE conglomerate and a positive relationship with the profits of IR. (3) The recovery rate is negatively related to the profits of REE conglomerate and positively related to the profits of IR. Increasing the REE recovery rate will enhance the profitability of the IR. (4) In terms of social effects, higher acquisition price of recycled REE continuously reduce consumer surplus and social welfare. Although the REE recovery rate does not affect consumer surplus, it has a significant positive impact on social welfare.