PreprintCited by 16Sustainable Development and Environmental ManagementSustainable Supply Chain ManagementLaw, Economics, and Judicial Systems

The DOI matches its Crossref record; 58 of the 59 references it cites were found in a registry or an index; 1 of the 57 sources its claims cite were checked for support.

Win Together or Lose Alone: Circular Economy and Hybrid Governance for Natural Resource Commons

Open access
Becchetti, Leonardo, Bova, Demetrio Miloslavo, Raffaele, Luca·2024·Journal of Cleaner Production

Abstract

Natural resource commons are rivalrous non-excludable goods subject to the well-known market failure of overexploitation (also known as the tragedy of the commons) due to coordination failure, short-termism and free riding. We investigate how innovation in circular economy and (multistakeholder) network contracts can contribute to addressing the problem. More specifically, circular economy innovation can improve the efficiency of investment in regeneration of the natural resources, while network contracts can create a legal framework preventing coordination failures and increasing the effectiveness of individual willingness to act cooperatively. The model addresses and discusses governance issues arising in network contracts and the need to implement them from a multistakeholder perspective considering heterogeneity in the target quality of natural resources across stakeholders.

Overview

AI snapshot

Written from the paper’s full text.

TL;DR

The paper argues that circular economy innovation plus hybrid governance—network contracts and multistakeholder monitoring—can address natural resource commons problems such as overexploitation, short-termism, and free riding. Its model shows that cooperation can preserve the common good and sustain income/employment, while excess competition can make unilateral regeneration economically unsustainable.

Key findings

  • Circular economy innovation improves the efficiency of investment in regenerating natural resources, while network contracts create a legal framework that prevents coordination failures and increases the effectiveness of individual willingness to cooperate.
  • In the model, starting from perfect quali-quantity (Q = 1), non-cooperation is the dominant strategy in scenario A; this degrades Q over time, raises production and restoration costs, reduces employment and income, and can trigger exit from the market.
  • Under perfect competition, a player who cooperates while the other free-rides may have no sales (pq = 0), making cooperation economically unsustainable: “you win together or lose alone.”
  • Higher circular economy regeneration efficiency (E) reduces regeneration costs, improves cooperative payoffs, and can allow regeneration even without cooperation if revenues are not too low; the paper also cites COMIECO/CONAI enabling Italy to reach an 87.3% paper and cardboard recycling rate by 2020, surpassing the EU’s 85% target for 2035.

Methods

  • Theoretical model of profit-maximizing entrepreneurs who use labor and the “quali-quantity” (Q) of a natural resource common as production inputs; Q is modeled as a Verhulst logistic function, with waste-pollution reducing Q unless regeneration expenses are incurred.
  • Game-theoretic payoff matrix with two identical entrepreneurs choosing cooperative regeneration (cR = R*/2) or free riding (cR = 0), analyzed under three cost-parametric scenarios (A, B, C) and their competitive versions.
  • Long-term dynamics are illustrated in Figs. 1–2 under restrictive assumptions, including E ≪ 1, R0 = 0, one-shot noncooperative games, indivisible production/labor, and constant prices, waste-pollution, and efficiency; no empirical dataset or estimation is used.

Limitations

  • The paper states that its model is a simplified version of reality with several restrictive assumptions; time dynamics, free riding management, monopolistic drift, circular economy management strategies, transaction costs, competition reduction, international competition, and repeated games can be further developed.
  • The paper states that transaction costs and competition reduction are discussed but not formalized, and that international competition and protective measures require further discussion.
  • Evident from the text: the analysis is analytical/illustrative rather than empirically estimated, and the figures rely on stylized assumptions and are not calibrated to observed data.

Model-written summary. Check it against the paper before relying on it.

Integrity signals

Registry

Crossref · 10.2139/ssrn.4880178

Cites

58 of 58 references verified0 citation errors · 0 not checkable

Statistics

Nothing to recompute.

Verification

Claims the paper makes

72 Own interpretation · 42 No basis given · 18 Not checked yet · 7 No full text of the sources · 2 Sources not found · 1 Couldn’t confirm · 1 Check pending · accuracy not yet measured

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Show all 64 claims

  • It may state two separate claims as one. 58
  • Probably not a substantial claim. 36
  • The quote only partly states this claim. 1
79 of 79
  • The paper relies on this without support.

    The main conditions that make the tragedy of the commons happen are open access (non-excludability) to the rivalrous common good, lack of information, negative externalities, and the absence of well-defined and exclusive property rights.

    “The main conditions that make this ' tragedy ' happen are open access (non-excludability) to the rivalrous common good, lack of information, negative externalities, and the absence of well-defined and exclusive property rights.”
  • The authors state this as an assumption.

    In the process of production, entrepreneurs generate waste-pollution that reduces the quali-quantity unless they incur regeneration expenses.

    “In the process of production, they generate waste-pollution that reduces the quali-quantity unless they incur regeneration expenses.”
  • The authors state this as an assumption.

    The entrepreneur is a profit maximizer (π), having labor (L) and the common good of sufficient quali-quantity (Q) as production factors, with the latter being freely accessible.

    “We model the choice of the entrepreneur, assumed to be a profit maximizer ( π ), and having labor (L) and the common good of sufficient quali-quantity (Q) as production factors, with the latter being freely accessible.”
  • The authors state this as an assumption.

    The market is perfectly competitive where entrepreneurs are price-takers, meaning the price (p) is constant and the impact of the quantity supplied (q) by a single entrepreneur is negligible (dp/dq ≈ 0).

    “Initially, we assume a market with perfect competition where entrepreneurs are price-takers, meaning the price (p) is constant and the impact of the quantity supplied (q) by a single entrepreneur is negligible (dp/dq ≈ 0).”
  • The authors state this as an assumption.

    The full regeneration cost R* is zero if the quali-quantity is already maximum, increases as the quali-quantity decreases, and decreases as the circular economy regeneration efficiency E increases.

    “Let us label the full regeneration cost R*. The full regeneration cost is zero if the quali-quantity is already maximum (i.e., there is no need for regeneration), increases as the quali-quantity decreases, and decreases as the circular economy regeneration efficiency E increases.”
  • The authors state this as an assumption.

    The factors impacting on Q, namely (R0 + ∑Ri(cRi, E), ∑qi ri), are taken as given when the i-th entrepreneur makes her choice about cRi.

    “Additionally, we will assume that the factors impacting on Q, namely ( R 0 + ∑ Ri cRi , E ) ∑ qi r i ) , which will vary to formulate different scenarios, are taken as given when the i-th entrepreneur makes her choice about cRi .”
  • The authors state this as an assumption.

    p, r, E, and R0 are positive and constant over time.

    “Finally, for simplicity and without lack of generality, we assume, unless specifically indicated otherwise, that p, r, E, and R0 are positive and constant over time.”
  • The authors state this as an assumption.

    In the short term, investing in R has null impact on the common good because regeneration investment has effects in the subsequent period.

    “In the short term, the impact of investing in the quali-quantity of the common good (R) is null, as the regeneration investment has effects in the subsequent period.”
  • The authors state this as an assumption.

    Each entrepreneur has an exit option and, being a profit maximizer, ceases activity when it generates losses.

    “Each entrepreneur has an exit option and, being a profit maximizer, ceases activity when it generates losses.”
  • The authors state this as an assumption.

    No natural regeneration mechanisms are at work (R0 = 0).

    “No natural regeneration mechanisms are at work (R0 = 0) to emphasize the importance of cooperation in preventing the deteri­ oration of the natural common good.”
  • The authors state this as an assumption.

    The amount of output produced by a single producer (q) is chosen along with R and thus is the same for all strategy combinations.

    “The amount of output produced by a single producer (q) is chosen along with R and thus is the same for all strategy combinations.”
  • The authors state this as an assumption.

    Because these are common goods and players can enter and exit, it is impossible to establish trust between players or expectations about the other, making the games non cooperative and one-shot.

    “Because these are common goods and players can enter and exit, it is impossible to establish trust between players or expectations about the other, making the games non cooperative and one-shot.”
  • The authors state this as an assumption.

    In scenario A, if both invest in regeneration costs remain constant; if only one invests costs increase in period 2; if no one invests production costs increase even more but less than R*/2.

    “Given cost function characteristics in (3) we can conveniently as­ sume, without lack of generality that: i) if both invest in regeneration ( R * 2 ), costs remain constant over time (C); ii) if only one invests in regeneration, costs (C1) increase in period 2 (C1 > C); iii) if no one invests, production costs (C2) increase even more (C1 < C2) but, in any case, by definition, less than R * 2”
  • The authors state this as an assumption.

    In scenario B, C2/C1 > R*/2 > C1/C.

    “Similar to the previous scenario, but C 2 C 1 > R * 2 > C 1 C .”
  • The authors state this as an assumption.

    In scenario C, C2/C1 > C1/C > R*/2.

    “Similar to the previous scenario, but C 2 C 1 > C 1 C > R * 2 .”
  • The authors state this as an assumption.

    In the competitive version, if an entrepreneur has higher costs than the other, and this applies only to the case of different choices, then they have no returns due to competition.

    “If an entrepreneur has higher costs than the other, and this applies only to the case of different choices, then they have no returns due to competition.”
  • The authors state this as an assumption.

    If there is a dominant strategy, systematically lower cost and higher profit, then competition results in zero profit, making the alternative necessarily negative in profit and thus not selectable due to the exit condition.

    “If there is a dominant strategy, systematically lower cost and higher profit, then competition results in zero profit, making the alternative necessarily negative in profit and thus not selectable due to the exit condition.”
  • The authors state this as an assumption.

    There exists an optimal level of quality-quantity of the natural resource common that is higher for local communities than for businesses.

    “considering that there exists an optimal level of quality-quantity of the natural resource common (e.g., the river) that is higher for local communities (due to preferences related to the enjoyment of environmental amenities or tourism development) than for businesses.”
  • The paper relies on this without support.

    Situations with incomplete contracts, where not all contingencies can be regulated, can occur.

    “It is possible to find oneself in situations with incomplete contracts where not all contingencies can be regulated.”
19 of 19

Self-check

Percentages, sums and reported differences re-computed from the paper’s own numbers.

Each contradiction between two passages listed here was confirmed by an independent check.

1 of 1

Citations

Cites

Show all 59 references

Research works printed but not linked: 18

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  2. Bovenberg, A., de Mooij, R., 1994. Environmental levies and distortionary taxation. Am. Econ. Rev. 84 (4), 1085 -1089. http://refhub.elsevier.com/S0959-6526(2403969-6/optdGML5oZVnt)
  3. Bruni, L., Smerilli, A., 2010. Cooperation and diversity: an evolutionary approach. Munich Personal RePEc Archive. MPRA Paper, no. 20564. http://refhub.elsevier.com/S0959-6526(2403969-6/sref9)
  4. Bulte, E., Ruben, R., 2023. Development Economics between Markets and Institutions: Incentives for Growth, Food Security and Sustainable Use of the Environment. BRILL. http://refhub.elsevier.com/S0959-6526(2403969-6/sref10)
  5. Grossi, G., Polsinelli, V., 2020. A sustainable management of water and soil: the case of river contracts. GeoProgress J. 7, 37 -55. http://refhub.elsevier.com/S0959-6526(2403969-6/sref26)
  6. Hakansson, H., Snehota, I., 1995. Developing Relationships in Business Networks. Van Nostrand Reinhold, New York. http://refhub.elsevier.com/S0959-6526(2403969-6/sref27)
  7. Hardin, G., 1968. The tragedy of the commons. Science 162, 1243 -1248. http://refhub.elsevier.com/S0959-6526(2403969-6/sref29)
  8. Jin, B.-H., Wu, C.-Y., Liao, Y.-T., 2015. How does social capital work in regional innovation systems? The moderating role of contract design. Adv. Manag. Appl. Econ. 5, 1 -19. http://refhub.elsevier.com/S0959-6526(2403969-6/sref35)
  9. Lorenzini, E., 2011. Distretti culturali, capitale sociale e nuove tecnologie dell ' informazione e della telecomunicazione. EyesReg 1 (3), 1 -3. http://refhub.elsevier.com/S0959-6526(2403969-6/sref39)
  10. Menard, C., 2007. The governance of hybrid organizations. Presented at the EmNet Conference On Economics And Management Of Networks , Rotterdam. http://refhub.elsevier.com/S0959-6526(2403969-6/sref41)
  11. Ostrom, E., 1990. Governing the Commons: The Evolution of Institutions for Collective Action. Cambridge University Press, Cambridge. https://doi.org/10.1017/ CBO9780511807763.
  12. Pesaro, G., 2011. Valorizzazione dei beni culturali e sviluppo locale: Una riflessione sui distretti culturali. EyesReg 1 (2), 46 -49. http://refhub.elsevier.com/S0959-6526(2403969-6/sref49)
  13. Porter, M.E., 1991. America ' s green strategy. Sci. Am. 264 (4), 91 -168. http://refhub.elsevier.com/S0959-6526(2403969-6/optizs1NsUhmo)
  14. Ricciardi, A., 2003. Le Reti di Imprese: Vantaggi Competitivi e Pianificazione Strategica. Franco Angeli, Milan. http://refhub.elsevier.com/S0959-6526(2403969-6/sref51)
  15. Shin, E., Choi, S.H., Makarigakis, A., Sohn, O., Clench, C., Trudeau, M., 2020. Water Reuse within a Circular Economy Context. Global Water Security Issues (GWSI), Series No. 2. UNESCO Publishing. http://refhub.elsevier.com/S0959-6526(2403969-6/sref55)
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Metadata

Authors
Becchetti, L., Bova, D. M., & Raffaele, L.
Affiliations
University of Rome Tor Vergata (IT)
Corresponding author
Becchetti, Leonardo
Venue
Journal of Cleaner Production
Publisher
Elsevier BV
Published
2024
Volume
486
Pages
144520-144520
ISSN
0959-6526 (ISSN-L)
OpenAlex
W4405494973
Cited by
16
References
59
Citations by year
2026: 5 · 2025: 11
FWCI
4.50
Type
journal article
Language
en
Open access
Licence
cc-by
Locations
  • Journal of Cleaner Production (publishedVersion, cc-by)
  • SSRN Electronic Journal (submittedVersion)
Topics
  • Physical Sciences › Environmental Science › Management, Monitoring, Policy and Law › Sustainable Development and Environmental Management
  • Social Sciences › Business, Management and Accounting › Strategy and Management › Sustainable Supply Chain Management
  • Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Law, Economics, and Judicial Systems
Keywords
circular economy, tragedy of the commons, network contracts, multi-stakeholder governance, coordination failure, overexploitation, free-riding, short-termism, stakeholder heterogeneity, commons governance

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