IDEAS home Printed from https://ideas.repec.org/p/zbw/tuewef/145.html
   My bibliography  Save this paper

Growth in a circular economy

Author

Listed:
  • Compagnoni, Marco
  • Stadler, Manfred

Abstract

We present a model of natural resources and growth that stresses the influence of an incomplete circularity of exhaustible natural resources. In particular, we analyze the recycling process and the material balance principle, two fundamental aspects of a circular economy. When market failures arise or complete recycling is not possible for technical reasons, then the equilibrium outcomes in terms of output, consumption, and prices for the material inputs are distorted compared to the socially optimal solution. However, the introduction of a market for waste and a system of subsidies/taxes on virgin and recycled resources enables an internalization of the externalities. The importance of technological progress in order to foster "circularity", i.e. both to improve resource efficiency in the production process and to enhance the backflow of materials from waste to production, is highlighted.

Suggested Citation

  • Compagnoni, Marco & Stadler, Manfred, 2021. "Growth in a circular economy," University of Tübingen Working Papers in Business and Economics 145, University of Tuebingen, Faculty of Economics and Social Sciences, School of Business and Economics.
    • Handle: RePEc:zbw:tuewef:145
    DOI: 10.15496/publikation-56495
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/235513/1/176110229X.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.15496/publikation-56495?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Marta Kornafel & Ivan Telega, 2020. "Dynamics of natural capital in neoclassical growth model," International Journal of Sustainable Economy, Inderscience Enterprises Ltd, vol. 12(1), pages 1-24.
    2. Jacopo Zotti & Andrea Bigano, 2019. "Write circular economy, read economy’s circularity. How to avoid going in circles," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 36(2), pages 629-652, July.
    3. Lucas Bretschger & Sjak Smulders, 2007. "Sustainable Resource Use and Economic Dynamics," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 36(1), pages 1-13, January.
    4. Korhonen, Jouni & Honkasalo, Antero & Seppälä, Jyri, 2018. "Circular Economy: The Concept and its Limitations," Ecological Economics, Elsevier, vol. 143(C), pages 37-46.
    5. Lafforgue, Gilles & Rouge, Luc, 2019. "A dynamic model of recycling with endogenous technological breakthrough," Resource and Energy Economics, Elsevier, vol. 57(C), pages 101-118.
    6. Pittel, Karen & Amigues, Jean-Pierre & Kuhn, Thomas, 2010. "Recycling under a material balance constraint," Resource and Energy Economics, Elsevier, vol. 32(3), pages 379-394, August.
    7. Partha Dasgupta & Geoffrey Heal, 1974. "The Optimal Depletion of Exhaustible Resources," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 41(5), pages 3-28.
    8. Almuth Scholl & Willi Semmler, 2002. "Sustainable economic growth and exhaustible resources: A model and estimation for the US," Discrete Dynamics in Nature and Society, Hindawi, vol. 7, pages 1-14, January.
    9. Karen Pittel, 2006. "A Kuznets Curve for Recycling," CER-ETH Economics working paper series 06/52, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
    10. Di Vita, Giuseppe, 2007. "Exhaustible resources and secondary materials: A macroeconomic analysis," Ecological Economics, Elsevier, vol. 63(1), pages 138-148, June.
    11. Di Vita, Giuseppe, 2001. "Technological change, growth and waste recycling," Energy Economics, Elsevier, vol. 23(5), pages 549-567, September.
    12. Ayres, Robert U., 1999. "The second law, the fourth law, recycling and limits to growth," Ecological Economics, Elsevier, vol. 29(3), pages 473-483, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Lafforgue, Gilles & Lorang, Etienne, 2022. "Recycling under environmental, climate and resource constraints," Resource and Energy Economics, Elsevier, vol. 67(C).
    2. Fabre, Adrien & Fodha, Mouez & Ricci, Francesco, 2020. "Mineral resources for renewable energy: Optimal timing of energy production," Resource and Energy Economics, Elsevier, vol. 59(C).
    3. Lafforgue, Gilles & Rouge, Luc, 2019. "A dynamic model of recycling with endogenous technological breakthrough," Resource and Energy Economics, Elsevier, vol. 57(C), pages 101-118.
    4. Mazzarano, Matteo, 2022. "Material governance and circularity policies: How waste policies and innovation affect household appliances' accumulation," Ecological Economics, Elsevier, vol. 200(C).
    5. Pittel, Karen & Amigues, Jean-Pierre & Kuhn, Thomas, 2010. "Recycling under a material balance constraint," Resource and Energy Economics, Elsevier, vol. 32(3), pages 379-394, August.
    6. Zhou, Sophie & Smulders, Sjak, 2021. "Closing the loop in a circular economy: Saving resources or suffocating innovations?," European Economic Review, Elsevier, vol. 139(C).
    7. Meran, Georg, 2023. "Is green growth possible and even desirable in a spaceship economy?," Ecological Economics, Elsevier, vol. 213(C).
    8. Voosholz, Frauke, 2014. "The influence of different production functions on modeling resource extraction and economic growth," CAWM Discussion Papers 72, University of Münster, Münster Center for Economic Policy (MEP).
    9. Millar, Neal & McLaughlin, Eoin & Börger, Tobias, 2019. "The Circular Economy: Swings and Roundabouts?," Ecological Economics, Elsevier, vol. 158(C), pages 11-19.
    10. Tilman Santarius & Johanna Pohl & Steffen Lange, 2020. "Digitalization and the Decoupling Debate: Can ICT Help to Reduce Environmental Impacts While the Economy Keeps Growing?," Sustainability, MDPI, vol. 12(18), pages 1-20, September.
    11. Hart, Rob, 2016. "Non-renewable resources in the long run," Journal of Economic Dynamics and Control, Elsevier, vol. 71(C), pages 1-20.
    12. Sasaki, Hiroaki & Mino, Kazuo, 2024. "Effects of exhaustible resources and declining population on economic growth with Hotelling’s rule," International Review of Economics & Finance, Elsevier, vol. 94(C).
    13. Meleddu, Marta & Vecco, Marilena & Mazzanti, Massimiliano, 2024. "The Role of Voluntary Environmental Policies Towards Achieving Circularity," Ecological Economics, Elsevier, vol. 219(C).
    14. Simone Valente, 2007. "Human Capital, Resource Constraints and Intergenerational Fairness," CER-ETH Economics working paper series 07/68, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
    15. Tsuboi, Mizuki, 2019. "Resource scarcity, technological progress, and stochastic growth," Economic Modelling, Elsevier, vol. 81(C), pages 73-88.
    16. Pommeret, Aude & Ricci, Francesco & Schubert, Katheline, 2022. "Critical raw materials for the energy transition," European Economic Review, Elsevier, vol. 141(C).
    17. Bongers, Anelí & Casas, Pablo, 2022. "The circular economy and the optimal recycling rate: A macroeconomic approach," Ecological Economics, Elsevier, vol. 199(C).
    18. Agliardi, Elettra & Kasioumi, Myrto, 2023. "Closing the loop in a duopolistic circular economy model," International Journal of Production Economics, Elsevier, vol. 262(C).
    19. Quentin Couix, 2018. "The role of natural resources in production: Georgescu-Roegen/ Daly versus Solow/ Stiglitz," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-01702401, HAL.
    20. Jouni Korhonen & Birk Granberg, 2020. "Sweden Backcasting, Now?—Strategic Planning for Covid-19 Mitigation in a Liberal Democracy," Sustainability, MDPI, vol. 12(10), pages 1-15, May.

    More about this item

    Keywords

    Circular economy; economic growth; natural resources; recycling;
    All these keywords.

    JEL classification:

    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development
    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:tuewef:145. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/wftuede.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.