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Demand Curve Estimation of Locally Produced Woody Biomass Products

Published by the American Society of Agricultural and Biological Engineers, St. Joseph, Michigan

Citation:  Applied Engineering in Agriculture. 34(1): 145-155. (doi: 10.13031/aea.12392) @2018
Authors:   Daisuke Sasatani, Ivan L Eastin
Keywords:   Biochar, Forest products marketing, Market penetration rate, Price skimming strategy, Wood briquette.

Abstract. The goal of the Waste-to-Wisdom project is to produce and sell value-added products derived from post-harvest forest residues including wood briquettes, torrefied briquettes, and biochar. The consumer demand for these products (i.e., market size) determines the success of manufacturers especially when the location of production is far away from a population center and the producer is a price taker. Consumers are often scattered and transportation costs from the factory to retail stores lower the net sales revenue at the plant. The objective of this study was to estimate the demand curves and the associated revenue functions of the bioenergy products in five case locations applying a market-based analysis. We first estimated the size of the potential market for the products in each location and then assumed a market penetration rate to estimate consumer demand. This information was used to develop a set of mathematical functions based on deductive logic. Plugging presumable values based on scenario assumptions into the models contributes to the economic feasibility studies.

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