The impact of universal recycling on the evolution of economic diversity

Based on von Neumann's model of an economy characterized by processes and goods, we add to that model a component representing capital equipment. We assume that the need for capital equipment by any process is proportional to the rate at which that process is running, and therefore an increase...

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Bibliographic Details
Published in:PloS one 2022-01, Vol.17 (1), p.e0262184-e0262184
Main Authors: Xu, Shubo Gabriel, Peskin, Charles S
Format: Article
Language:English
Subjects:
Dynamic models
Dynamical systems
Economic aspects
Economic growth
Economic models
Economics
Engineering and Technology
Equilibrium
Evolution
Evolutionary biology
Growth rate
Impact analysis
Methods
Model matching
Models, Economic
Physical Sciences
Prices
Pricing
Recycling
Recycling (Waste, etc.)
Research and Analysis Methods
Social Sciences
United States
Von Neumann algebras
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Summary:Based on von Neumann's model of an economy characterized by processes and goods, we add to that model a component representing capital equipment. We assume that the need for capital equipment by any process is proportional to the rate at which that process is running, and therefore an increase in rate requires that capital equipment be purchased, whereas a decrease in rate allows capital equipment to be sold. We thereby construct a continuous-time dynamical model, which we use to investigate the evolution of economic diversity under two price equilibrium scenarios: the first with non-negative prices and non-positive excess demands; the second with enforced market clearing and with prices allowed to be negative. The second scenario represents an economy in which recycling is required, so that excess supply cannot be discarded. We prove that at any time during the progression of the model economy, the solution to each of the two price equilibrium problems exists, and that non-uniqueness of the solution, if any, does not affect the development of the model economy. We compare matched model economies under the two scenarios by simulating their respective evolutions. In each case, the model economy experiences a process of selection and matures to a state of balanced growth, with a higher growth rate when excess supply is discarded, but with greater economic diversity with enforced recycling. The robustness of these qualitative results is demonstrated by repeated trials of simulations on matched pairs of model economies with different randomly chosen parameters.
ISSN:1932-6203
1932-6203
DOI:10.1371/journal.pone.0262184