Does ownership structure impact the integration of circular economy principles in agriculture?

Circular economy is a promising approach aimed at slowing down the use of natural resources, at lessening landscape and habitat disruption, which induces both reducing greenhouse gas emissions and helping limiting biodiversity loss. However, it scarcely explicitly takes into account the social dimension. As a developing field, it appears useful to try to shed some light on this issue. This article examines whether integrating financial incentives and cooperative values may enhance the adoption of environmentally-friendly consumption and production through a duopoly model in a food market with endogenous prices and qualities and heterogeneous consumers and producers. The two farmers differ in their use of fertilizers, one employs an organic input, which stems from organic wastes, and the second one uses a chemical one while the two consumers have a different willingness-to-pay for quality. We examine three cases, first when the farmers decide to sell directly their production to consumers, when they delegate to a private company the sale of their products and last when they pool together their production in a cooperative. In this paper, we try to find out how circular agriculture can contribute to the improvement of farmers revenue and how the organization structure can influence the choice for quality. Results suggest that rewarding compost increases consumer surplus while being involved in the cooperative enhances the production of high quality goods.