Open AccessMarket-based Approach in Shift from Linear Economy Towards Circular Economy Supported by Game Theory Analysis
Author(s) -
Martin Dolinsky,
Stephan Maier
Publication year - 2015
Publication title -
creative and knowledge society
Language(s) - English
Resource type - Journals
eISSN - 1338-5283
pISSN - 1338-4465
DOI - 10.1515/cks-2015-0009
Subject(s) - circular economy , underpinning , reuse , game theory , economics , incentive , government (linguistics) , sharing economy , industrial organization , economy , microeconomics , economic system , market economy , computer science , engineering , ecology , linguistics , philosophy , civil engineering , world wide web , biology , waste management
Purpose of the article is to partially describe underpinning economics for the circular economy. A circular economy (closed-loop system) is an advancement from the linear economy (open-loop system) which behaves according to the hierarchy of 6R, preferring reuse, remanufacture or recycle solutions insead of disposal (known also as a „linear dead-end“). This new approach is a trigger of new business models seeking many times vor various kinds of support from the side of government. However, governmental support is not neither the only option nor the most functional one. Underpinning economics for the circular economy can be based also at market-based tools. What we have in mind under this term for the purspose of this paper is the game in the market being played between buyers and sellers. Methodology : We have analyzed this interaction using game theory tool (interactive decision theory). The scietific goal of our paper was to suggest a quick market-based solution how to support circular economy business models whilst helping to the society to solve certain social problems. Our findings have led to a newly proposed way, how the current game in pricing could be changed. An emphasis shall be placed on strategies how to rise prices of linear economy products whilst offering wider social benefits to small sellers of such products. The price increase of linear economy products is considered in this paper as a market-based incentive to support recycled, remanufactured ones, whilst circular economy products are becoming more economically feasible in comparison with more expensive linear economy products.