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An economic mechanism of industrial ecology: Theory and evidence

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  • Yu, Xiang
  • Zhang, Yongsheng

Abstract

Industrial ecology, as a multidiscipline, represents an innovative approach that incorporates science, engineering, and social sciences in the research on how industrial systems should operate to achieving sustainable development. Currently, scientists and engineers play a dominant role in this field, while economic analysis is to some extent absent.. This paper provides a formalized economic theory, by employing a general equilibrium model, to investigate the economic mechanism of industrial ecology. Though all wastes are technically useful and could be reused as a resource input, whether a waste could be turned into ‘gold’ depends upon if its reuse is cost-effective. Therefore, the structure with full reuse of wastes is not necessarily more Pareto optimal than the structures without reuse in some cases. As the focus of the theory, we investigate the industrial parks in China to explain why industrial ecology works well in some cases and further explore its policy implications. The paper concludes with the suggestion that, as a transdisciplinary subject, industrial ecology could become more promising - both in theory and practice - if its economic foundation is further consolidated.

Suggested Citation

  • Yu, Xiang & Zhang, Yongsheng, 2021. "An economic mechanism of industrial ecology: Theory and evidence," Structural Change and Economic Dynamics, Elsevier, vol. 58(C), pages 14-22.
    • Handle: RePEc:eee:streco:v:58:y:2021:i:c:p:14-22
    DOI: 10.1016/j.strueco.2021.03.008
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    References listed on IDEAS

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