This paper analyzes the economic and environmental implications of mandatory recycling policies within a dynamic duopoly framework. Using a two-period Cournot model with identical firms producing a homogeneous good, we explore the impact of an exogenously imposed recycling rate on firms' production decisions, profits, consumer surplus, welfare, and environmental damage. In the first period, firms rely entirely on fresh inputs. In the second, they are required to recycle a portion of their initial production, though they may also continue using fresh inputs. Three types of equilibrium emerge, depending on the costs' parameters and the recycling rate. In equilibrium, firms always produce positive quantities in the first period. However, in the second period, either they both produce using a mix of fresh and recycled materials, both rely solely on recycled materials, or one firm uses both input types while the other uses only recycled materials. Notably, the analysis uncovers counterintuitive effects: stricter recycling regulations do not always reduce the use of fresh inputs or environmental harm and can even decrease economic welfare. These findings underscore the importance of carefully calibrating recycling policies, as overly stringent mandates can have unintended negative consequences. The model offers a novel theoretical lens on circular economy interventions, contributing to the broader debate on the design of sustainable production policies.