Econometrica: Oct 1951, Volume 19, Issue 4

La Demande des Biens Indirects

https://doi.org/0012-9682(195110)19:4<466:LDDBI>2.0.CO;2-P
p. 466-471

Rene Roy

The demand for intermediate commodities is related to the demand to the final commodities in the production of which they enter. It is shown how their elasticities are determined by the technical conditions of production as well as the market for the final products. In particular, positive price elasticities may appear if the fixed cost is an important part of the production expenses. The model is fairly simple but can easily be generalized.
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