New methodology to model the circular economy: Discrete dynamic Leontief model with stock management

Tóth-Bozó, Brigitta and Dobos, Imre (2025) New methodology to model the circular economy: Discrete dynamic Leontief model with stock management. ACTA OECONOMICA, 75 (4). pp. 584-598. ISSN 0001-6373

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Abstract

This study focuses on the problem of stock management, a part of the circular economy, considering reuse. The basis of our presented model is the well-known Leontief model, where we investigate the possibility and impact of collection and reuse processes. It also follows that the concept of a circular economy can be approached as a problem or task in several ways. Using the Leontief model's concept, we examine the dynamic case. The new result of this study is that we can show the effect of distinguishing between newly produced and reused goods on final consumption in the reuse process. We show that stock dependence is relevant to closing the circular economy model. The analysis of the discrete dynamical system shows the growth potential of reuse in the production process. In the model, the dynamization solves the waste management problem: the collected but unused goods appear as stock in the next production period. The originality stems from the dynamic, stock-based, and dual-sub-economy extension of the Leontief model, specifically tailored to address reuse, stock management, and waste minimization in the circular economy, filling a recognized gap in the existing literature. We illustrate the results with numerical examples.

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