Just a side note, I'm not sure if this goes here, or in a science exchange...

Asteroids are expensive, and can easily be worth billions of dollars. They contain many types of precious metals, like gold, and platinum.

In the future, asteroid mining will be a huge business. With new advancements in technology, and cheaper launches, we can ship asteroid material to Earth, with a huge ROI.

But how will bringing back all these metals impact the economy?

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    $\begingroup$ Could you please back up your claims about the huge ROI? I have some contradictory information. $\endgroup$ – Giskard Nov 24 '19 at 21:51
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    $\begingroup$ ...in case you are not willing to back up your claim, would you like to buy some prime lunar real estate from me? $\endgroup$ – Giskard Nov 24 '19 at 21:52
  • $\begingroup$ That's why I said "future". $\endgroup$ – user24424 Nov 26 '19 at 3:54

I doubt that asteroid mining will hugely increase ROI. Price is endogenous so it will fall as a response to increase in supply and hence ROI will fall.

Assuming that space mining is not natural monopoly, or will not be monopolized by government it will decrease the price of those metals by shifting supply to the right in their individual markets (as mining them from space would not be done by profit seeking firms if it is cheaper to do on earth).

Decrease of price in these resources will also decrease the prices of goods that use these metals as inputs shifting supply of those goods as well.

Assuming this will happen for large enough number of markets it can also shift the whole aggregate supply in the economy. This means that the aggregate output will be higher at a lower price level (see the picture below). It will also raise welfare of consumers primarily in the main industries affected by the lower prices of those resources but also throughout the whole economy.

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  • $\begingroup$ Could you explain your picture a little more please? $\endgroup$ – user24424 Nov 26 '19 at 3:57
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    $\begingroup$ @ADynamicSquid sure. First the picture is of aggregate economy so you have to make an assumption that the mining will not only affect market for platinum or gold but also whole economy. Once you assume that increase in available resources will shift both short aggregate supply (AS) and long run aggregate supply LRAS to the right as the production capacity of economy increases. Aggregate demand will be unchanged because mining should not change people’s preferences, tastes etc, so the new equilibrium (B) will occur at a point along demand curve in intersection with new LRAS2 and AS2 $\endgroup$ – 1muflon1 Nov 26 '19 at 9:39
  • $\begingroup$ Ah, got it, thanks! $\endgroup$ – user24424 Nov 27 '19 at 2:24

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