ABSTRACT
This chapter looks at the role minerals play in production and the economy and describes how an efficient market in recyclable, depletable resources would work. It discusses markets for discarded electronics in industrializing countries may lack good enforcement mechanisms to ensure proper disposal of the hazardous components. In the presence of technological progress, the increasing reliance on the lower-grade ores would not necessarily precipitate an increase in cost, at least initially. The rising costs of virgin materials and of waste disposal increase the attractiveness of recycling. Recognizing the importance of labor costs raises the possibility that recycling rates would be higher in regions where labor costs are lower, which does seem to be the case. A profit-maximizing firm will undertake exploration activity until the marginal discovery cost equals the marginal scarcity rent received from a unit of the resource sold. Technological progress reduces the cost of ore through new ways to extract, process, and use it.
