The circularity paradox in secondhand markets: value retention, allocation, and rebound effects

Reuse avoids emissions by displacing new production, yet the money it frees can finance new consumption. We link displacement benefits, allocation rules, and re-spending in one framework, applied to listing-level prices from a major Swedish secondhand marketplace. Using projected new-product prices and input-output carbon intensities, we estimate potential avoided emissions, potential increased emissions from re-spending, and the circular rebound effect (CRE). Under zero-burden allocation, CRE depends only on the relative carbon intensity of re-spending. Under economic allocation, higher value retention shrinks calculated avoided emissions while re-spending stays fixed, so CRE rises most for products that hold value best. We term this the circularity paradox: a property of the economic allocation accounting framework, not of reuse itself. The allocation rule changes the calculated result, not the physical emissions. The estimates are illustrative, not measured, impacts. We therefore treat zero-burden as the reference for rebound and economic allocation as an accounting sensitivity.