Slow or fast? The controversy between dematerialisation and closed-loop as circular economy technical approaches

Dematerialisation and closed-loop strategies stand as two pivotal technical approaches for achieving the circular economy, both recognised for their potential to enhance economic performance and environmental sustainability by industries. However, previous literature has predominantly focused on optimising strategic combinations at the operational level, while overlooking the critical issue of choice between these two technological pathways. To address this gap, this study employs gametheoretic analytical models to formulate their impacts on the prices, market demand, profits and environment impact. The findings reveal that production costs within an industry serve as a key mechanism influencing strategy choice: specifically, the closed-loop strategy is more advantageous for low-and-medium-cost industries, whereas the dematerialisation strategy proves more beneficial for high-cost industries. From an environmental perspective, no strategy is theoretically optimal under all conditions. Consequently, we propose a “economic-environmental” conditions framework for the optimal pathways for the circular economy in seven intervals with respect to cost and durability, designed to assist enterprises and governments in reducing sunk costs associated with exploring and investing in circular economy pathways.