One of the most interesting but troublesome features of daily recycling is the mixture of different types of household waste and degradation of a recycled material caused by the mixture of different types of waste. This is often seen in recycling of materials such as used papers, plastics and so on. This paper analyses this aspect, and demonstrates how the formation of prices and activity levels is made in a long-run growing economy, by means of a neo-Ricardian type of production model. It is proved that a long-run equilibrium exists under reasonable assumptions. It is also shown how the sorting rate of different types of waste affects the grade of recyclable resources as well as prices.
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