A global asymmetric duopoly game of relatively scarce resources

Abstract

This study analyses the dynamics of the global rare earth element market, with a focus on China's dominant role as the primary supplier, which is crucial for the energy transition and digitalization. Using a game-theoretic approach, the research examines a potential duopoly market structure that may emerge over time, as well as potential shifts in supply from China to other countries in this scenario. It considers China's low marginal costs and factors such as resource extraction and discoveries. Additionally, the study examines the strategic market interactions, the role of technological advancements, and policy support in shaping market outcomes. The methodology assumes that agents have limited foresight and use a learned value function to strategically assess outcomes based on their own and others' actions, while accounting for environmental constraints. © The Author(s), 2026. Published by Cambridge University Press.