The crushing demands are derived demands which are formulated from the demands for the final products and based on the cost-minimization strategy for a given level of output.
Consequently and reciprocally, each policy impact would have an effect on the related major oilseed markets via derived demand (Figure 2).
The price elasticity of the derived demand for crushing is elastic at the mean value of -1.34.
Tsao Mihn, president of Formosa Petrochemical, for instance, commented that his company's profits for the quarter will be better than a quarter earlier, mainly because reduced supply of refined oil from India and Japan due to periodical refinery maintenance, along with surging
derived demands during the underway Olympics Games, will cause prices of gasoline, diesel and aircraft fuel to pick up in the quarter.
Similarly, given upstream inverse derived demands, equilibrium at the upstream stage is derived as:
Specifically, given costs and the derived demand curve facing the upstream stage, upstream firms simultaneously choose output to maximize profits, which generates Nash equilibrium at the upstream stage.
Because the distributors have different marginal costs, they will exhibit different derived demands for the manufacturer's product for any given final product demand curve.
Because the efficient distributors exhibit a larger derived demand curve for any given final product demand, the profits earned by the manufacturer are greater when these firms distribute its product, i.e., [[pi].sup.E.sub.U] > [[pi].sup.I.sub.U].
Application of the derivative principle then yields the following derived demands for the discrete reforestation choice inputs i = 1, 2:
The owner's derived demand for acreage to be planted (denoted as [A.sup.1]) is obtained by partially differentiating equation [1] with respect to w, the per-acre cost of planting: