4NC Figure B2: Overview of SADEM
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Textural description of figure
The figure illustrates the SADEM model with the arrows depicting the upward movement of prices and the downward movement of useful energy demands respectively. The figure shows how oil and coal supply are assumed to be perfectly elastic (arrows only point up). The prices for these fuels are fixed by assumption as New Zealand is assumed to be a price taker in these markets. Similarly, heavy industries (forestry, basic metals and petrochemicals) are assumed to have inelastic demand that is their demand is fixed by assumption and does not respond to price. SADEM's equilibrium for supply and demand only really applies to the natural gas, electricity, light industry/commercial demand and residential demand modules.
