On Inclusive Market System Of The Circular Economy

Circular economy, which bears the mission of China's economic growth pattern transformation and sustainable development realization, has encountered numerous difficulties and is limping painstakingly to find its way. The conflicts and collisions between ideality and reality profoundly reflected the incompatibility of circular economy in current China's immature market.In China, the theory and practice of circular economy were firstly researched by environmental scientists and ecologists, and for a long time, the mainstream of economists paid little attention on this topic. Because of lacking support of economic theories and analytical tools, those researches are limited and could not benefit from the analyzing framework of circular economics using by mainstream economists. As a result, the incompatibility between circular economy and current market could hardly be systematically understood and explained by those studies. In this condition, the government is accustomed to directly use administrative measures to promote circular economy, and pays more emphasize on techniques rather than institutional arrangement. The compatibility between circular economy and market is ignored.By contrast, although the specialized studies on circular economy are not common internationally, researches focusing on resource productivity increase and de-materialization are surely active, and lots of environment-friendly, resource-saving economic activities and corresponding institutions have been well studied. Considering the fact that circular economy could only be realized in the market, those mature and healthy markets in developed countries together with well developed and well implemented institutions make the coupling of circular economy into the markets a relatively easy task, and the market mechanisms are effective for the promotion of circular economy.Thus in this dissertation, economic analyzing tools are attempted to use in the systematical research on the compatibility between circular economy and market.First, current theories and practices on circular economy are systematically reviewed, and the narrow concept of circular economy is re-examined. Then circular economy under the condition of open-mode economy is redefined from the perspective of sustainable development. Second, in the views of both microeconomics and macroeconomics, economic theories and methods are applied to analyze the reason why circular economy encountered obstacles and lack of driving force in China's current market. Through these analyses, the defects of current market systemthat constrained the development of circular economy are summarized, and the way of improvement is suggested. Based on these conclusions, the characters and functions that a circular-oriented market should feature are proposed. At last, the researcher gives the conclusion in the perspective of institutional arrangement that the process of current market turning to circular-oriented market is actually a process of market reconstruction. Aiming at eliminating the incompatibility of circular economy and current market, six key institutional arrangements are proposed to systematically promote the market reconstruction and the formation of a circular-oriented market.Comparing to current studies on circular economy, this research features the following aspects of innovations:First, based on microeconomic theories, an analyzing framework on circular economy is attempted to be constructed, considering externality, economics of scale, discount and resource intertemporal allocation. Then on the level of micro economics, this framework is used to systematically analyze the following issues: the distortion of price system and low efficiency of resource allocation caused by externality; the competitive disadvantage of the increasing returns to scale circular industry in the condition of lacking enough market scale; the influence of discount on circular industry investment and circular product consumption.Second, the mutual substitution and complement relationships among natural resources, labor, and capital as well as the negative impacts of these relationships on circular economy and sustainable development are analyzed in the view of developing macroeconomics.Third, six key institutional arrangements are proposed aiming at the elimination of the incompatibility between circular economy and current market. Through the implementation of these arrangements, the externality of economic activities is expected to be internalized, resource values could be fully realized, and circular-mode economic activities could be provided the capacity of spontaneous growth and development in the market. Furthermore, the six key institutional arrangements could encourage continuous backward eliminating and innovation emerging from the perspective of resource productivity promotion, and result in the circular-oriented market reconstruction.