Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/202436
Authors: 
Sørensen, Peter Birch
Year of Publication: 
2017
Series/Report no.: 
EPRU Working Paper Series 2017-04
Abstract: 
This paper sets up a Ramsey model with exhaustible natural resources to study the optimal recycling of polluting raw materials and household waste products. During the process of economic development it is optimal for the economy to go through an initial 'linear' phase with no recycling followed by a 'circular' phase where some materials and waste products are recycled to alleviate growing natural resource scarcity and environmental degradation. Ensuring the optimal degree of recycling in a market economy requires a Pigouvian tax on non-recycled raw materials combined with a subsidy to recycling of household waste and a tax on man-made wealth to internalize the environmental cost of capital accumulation.
Subjects: 
Circular economy
Linear economy
Optimal recycling
Hotelling rule
Pigouvian taxation
Environmental Kuznets Curve
JEL: 
Q53
Q58
H21
Document Type: 
Working Paper

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