Essays in industrial organization and business models for the circular economy

This thesis studies the potential of three business models to increase the circularity of our economy by reducing material consumption in production and/or consumption patterns with a focus on the strategic reaction between firms and consumers using the Industrial Organization toolbox. In particular: Chapter 1 studies the “coopetition” between a manufacturer and a platform to shed light on how the P2P market can be beneficial for both the environment and consumers, given the strategic interaction between the two firms. Chapter 2 analyzes the competition between a manufacturer of a primary product and a recycler that recycles the end-of-life products from the former, proving that an improvement of the collection system for recycling does not monotonically reduce the quantity of primary production. Chapter 3 studies the potential of a pay-per-use business model to be a win-win situation compared with the traditional selling business model, showing that pay-per-use does not always lead to higher profits for the firm and lower aggregate use levels from consumers. Together, the three chapters contribute to the discussion on the circular economy by stressing three important messages: (1) The ability to understand how the parts of a system interact to produce the behavior of the whole is critical when investigating the potential of the circular economy, (2) the new business models are not necessarily better than selling, and (3) there is no one-size-fits-all policy to correct the failure of the new business models to deliver the desired outcomes.