How to successfully apply industrial symbiosis

Hatsor, Limor and Jelnov, Artyom (2024): How to successfully apply industrial symbiosis.

Abstract

The premise of industrial symbiosis (IS) is that advancing a circular economy that reuses byproducts as inputs in production is valuable for the environment. We challenge this premise in a simple model. Ceteris paribus, IS is an environmentally friendly approach; however, implementing IS may introduce increased pollution into the market equilibrium. The reason for this is that producers’ incentives for recycling can be triggered by the income gained from selling recycled waste in the secondary market, and thereby may not align with environmental protection. That is, producers may boost production (and subsequent pollution) to sell byproducts without internalizing the pollution emitted in the primary industry or the recycling process. We compare the market solution to the social optimum and identify a key technology parameter (the share of reused byproducts) that may have mutual benefits for firms, consumers, and the environment.

• Item Type: MPRA Paper
• Language: English
• Keywords: circular economics; industrial symbiosis; pollution; environmental policy
• Subjects: L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L11 - Production, Pricing, and Market Structure ; Size Distribution of Firms; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q5 - Environmental Economics; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q5 - Environmental Economics > Q52 - Pollution Control Adoption and Costs ; Distributional Effects ; Employment Effects; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q5 - Environmental Economics > Q53 - Air Pollution ; Water Pollution ; Noise ; Hazardous Waste ; Solid Waste ; Recycling

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