We develop a growth model in which the use of a non-renewable resource yields waste. Recycling waste produces materials of poor quality. These materials can be reused for production only once a dedicated R&D activity has made their quality reach an exogenous minimum threshold. The economy then switches to a fully recycling regime. We refer to this switch as the technological breakthrough. We analyze the optimal trajectories of the economy and present the Ramsey-Keynes and Hotelling conditions in this context. We characterize the determinants of the date of the breakthrough, which is endogenous, as well as the discontinuity in the variables’ paths that is induced by this breakthrough. We show, in particular, that the availability of a recycling technology leads to a more intense exploitation of the resource and possibly to lower levels of consumption before the breakthrough.
Recycling; Non-renewable resource; Technical change; Growth;
- C61: Optimization Techniques • Programming Models • Dynamic Analysis
- O44: Environment and Growth
- Q32: Exhaustible Resources and Economic Development
- Q53: Air Pollution • Water Pollution • Noise • Hazardous Waste • Solid Waste • Recycling
Gilles Lafforgue, and Luc Rougé, “A dynamic model of recycling with endogenous technological breakthrough”, Resource and Energy Economics, vol. 57, August 2019, pp. 101–118.
Resource and Energy Economics, vol. 57, August 2019, pp. 101–118