Rebound Effects of Digital Textile Microfactories in Fashion, a System Dynamics Study of CO2 Emissions

The fashion industry's high resource use and globalised supply chains generate environmental degradation through overproduction, waste and pollution. Digital Textile Microfactories (DTMFs) are promoted as a more sustainable alternative because they enable fast, digitalised and often localised production, but lower costs and a greener image may also trigger rebound effects. We develop a stylised system dynamics model of a T‐shirt market in a fictional city to analyse how DTMF diffusion may affect market behaviour and CO2‐eq emissions over time. The model represents feedbacks between production capacity, prices, sustainability perception, overconsumption and emissions and is used to simulate a baseline diffusion scenario and policy variants with price competition and an introductory subsidy. The results show that a technology shift towards DTMFs alone is insufficient to reduce emissions, because increased demand and overconsumption can outweigh per unit efficiency gains, which underscores the need for complementary demand side measures.