From (Micro-) Circularity To (Macro-) Mitigation: A Framework Bridging Firm-Level Circularity, Rebound Effects and Policies

Within firms, circular economy practices aimed at reducing, reusing, and recycling resources have the potential to improve resource efficiency. Yet, these micro- level interventions may not necessarily result in economy-wide reductions in resource consumption and greenhouse gas emissions. This paper presents a novel analytical framework to examine the pathways through which firm-level circularity leads to a "macro-level circular economy" characterized by lower resource use, extraction, and disposal, and ultimately, lower greenhouse gas emissions. Drawing from several strands of literature and employing sequential reasoning, we identify the necessary conditions under which circular practices at the firm level generate tangible benefits at the aggregate level. We show that these conditions correspond closely to principles of sufficiency. Subsequently, we examine policy instruments that can facilitate the achievement of a macro circular economy.