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

Peter Birch Sørensen

doi:10.1628/001522118X15097191506475

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

4 Citations (Scopus)

Abstract

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.

Original language	English
Journal	Finanzarchiv
Volume	74
Issue number	1
Pages (from-to)	71-87
ISSN	0015-2218
DOIs	https://doi.org/10.1628/001522118X15097191506475
Publication status	Published - 1 Mar 2018

Keywords

Faculty of Social Sciences
circular economy
linear economy
optimal recycling
Hotelling rule
Pigouvian taxation

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

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10.1628/001522118X15097191506475

https://mohrsiebeck.com/10.1628/001522118X15097191506475

Cite this

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abstract = "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.",

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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

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

Abstract

Keywords

UN SDGs

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Cite this