From the Linear Economy to the Circular Economy: A Basic Model

TY - JOUR

T1 - From the Linear Economy to the Circular Economy

T2 - A Basic Model

AU - Sørensen, Peter Birch

PY - 2018/3/1

Y1 - 2018/3/1

N2 - This paper sets up a Ramsey model with natural resources to study the optimal recycling of polluting raw materials. Under plausible conditions it is optimal for the economy to go through an initial linear phase with no recycling followed by a circular phase where a fraction of materials is recycled to alleviate growing natural resource scarcity and environmental degradation. In the presence of a Pigouvian tax on nonrecycled materials a competitive market economy will ensure the optimal degree of recycling.

AB - This paper sets up a Ramsey model with natural resources to study the optimal recycling of polluting raw materials. Under plausible conditions it is optimal for the economy to go through an initial linear phase with no recycling followed by a circular phase where a fraction of materials is recycled to alleviate growing natural resource scarcity and environmental degradation. In the presence of a Pigouvian tax on nonrecycled materials a competitive market economy will ensure the optimal degree of recycling.

KW - Faculty of Social Sciences

KW - circular economy

KW - linear economy

KW - optimal recycling

KW - Hotelling rule

KW - Pigouvian taxation

U2 - 10.1628/001522118X15097191506475

DO - 10.1628/001522118X15097191506475

M3 - Journal article

SN - 0015-2218

VL - 74

SP - 71

EP - 87

JO - FinanzArchiv

JF - FinanzArchiv

IS - 1

ER -