or other risks, such as fire (support activities for crop production, 161; silviculture and other forestry activities, 210; and support services for forestry, 240). The classification for each disaggregated sector in this industry is provided in Appendix 2, Table A.1.

_Table 3. SOE taxonomy in agriculture,_ _<u>forestry, and fishing</u>_

|**Agriculture, Forestry, and Fishing**<br>_Distribution of disaggregated sector_<br>**Competitive**<br>**Natural Monopoly**|**Industry (A)**<br>_s by category_<br>**Partially Contes**|**table**|
|---|---|---|
|36<br>0||3|
|92%<br>0%||8%|

Source: Authors’ elaboration _Table 4. Non-competitive disaggregated sectors in agriculture,_ _<u>forestry, and fishing</u>_

|**Agriculture, **<br>**NACE**<br>**Sector**|**Forestry, and Fishing (A)**<br>**Code Classification**<br>**Disaggregated sector**|**Code**|**Market**<br>**power**|**Partially contest**<br>**(+)**<br>**externalities**|**able**<br>**(-) **<br>**externalities**|
|---|---|---|---|---|---|
|(1) Crop and animal production,<br>hunting and related service<br>activities|Support activities for crop<br>production|161||X||
|(2) Forestry and logging|Silviculture and other forestry<br>activities|210||X||
||Support services to forestry|240||X||

Source: Authors’ elaboration

# B. Mining and Quarrying Industry (B)

The mining and quarrying industry covers all activities pertaining to the search for, and extraction and processing of, natural resources. The industry includes 15 disaggregated sectors that carry out the various steps needed to exploit natural resources, including coal, petroleum, natural gas, iron, uranium, and other metals and minerals. In NACE, activities related to the extraction and basic processing of crude materials (0510-0899) are separated from activities linked to mining support services such as exploration (09100990).

Contestability in mining sectors is limited by the scarcity and concentration of deposits. The geographic concentration of coal, petroleum, natural gas, iron, uranium, and other metals and minerals, and the high costs of extraction, leads to sunk costs and indivisibility of production. These factors naturally limit contestability in mining sectors. They are exacerbated by extreme scarcity of known deposits, for instance in the case of uranium or lithium (Rumble, 2018), and/or relatively high transport costs, for instance in the case of natural gas which is generally transported through pipelines (Mulder, 2006). This distinguishes the economics of mining from many quarrying activities or other extraction (e.g., salt, peat) wherein the natural resource is more abundant and dispersed.

Information frictions and related externalities can also exacerbate market functioning in mining. Information on mining and quarrying deposits is valuable as it allows market participants in upstream and downstream sectors to price natural resources accurately. Conversely, imperfect information on deposits can lead to suboptimal investments/trades over time. At the same time, obtaining information on reserves is costly as it requires significant investments into exploration. The market may not price information externalities accurately and provide less information than is optimal from a welfare perspective. This market failure justifies government involvement in the provision of information on reserves, either 17