🤖 AI Summary
This paper examines the structural impact of Section 1502 of the Dodd-Frank Act on the Democratic Republic of Congo’s tin export market. Methodologically, it employs a structural identification strategy, dynamic price elasticity estimation, and causal inference under missing unit-value data. Results show that mandatory due diligence and certification requirements severely impaired price responsiveness, driving demand elasticity toward zero and generating a certification-dependent “captive market” with persistent lagged rigidity. This study provides the first empirical identification of monopolistic market sclerosis induced by conflict-minerals regulation. Crucially, it demonstrates that regulatory relaxation alone fails to restore market flexibility; instead, an exogenous demand shock—triggered by Huawei’s 2019 supply-chain restructuring—unexpectedly disrupted the policy lock-in, enabling market rebalancing. These findings challenge the prevailing assumption that deregulation automatically restores market efficiency and introduce “exogenous shock–induced market unlocking” as a novel institutional mechanism.
📝 Abstract
This paper investigates the structural transformation of the Democratic Republic of the Congo (DRC) tin market induced by the U.S. Dodd-Frank Act. Focusing on the breakdown of the pricing mechanism, we estimate the price elasticity of export demand from 2010 to 2022 using a structural identification strategy that overcomes the lack of reliable unit value data. Our analysis reveals that the regulation effectively destroyed the price mechanism, with demand elasticity dropping to zero. This indicates the formation of a ``captive market'' driven by certification requirements rather than price competitiveness. Crucially, we find strong hysteresis; deregulation alone failed to restore market flexibility. The structural rigidity was finally broken not by policy suspension, but by the 2019 ``Huawei shock,'' an external demand surge that forced supply chain diversification. These findings suggest that conflict mineral regulations can induce monopolistic bottlenecks that are resilient to simple deregulation.