Joint supply occurs when two goods are produced together from the same origin / raw material.
Examples of joint supply
- If you grow wheat, you get both wheat and straw.
- Producing refined flour creates bran as a byproduct. Bran can be used as fibre ingredient or using in compost
- If you increase the supply of beef (keeping more cattle) you will also increase the supply of leather (a byproduct of beef)
- If you decrease the supply sheep, there will be a fall in both mutton and wool.
- If you increase supply of petrol, you will get other byproducts of refining oil, such as butane.
Diagram of joint supply
The diagram on the left represents the supply of beef. If there is an increase in demand for beef, then the supply of beef will rise.- With more cows in production, there will be also a shift to the right in the supply of leather.
The diagram on the left represents the supply of beef. If there is an increase in demand for beef, then the supply of beef will rise.By-product
Joint supply usually arises because producing a good, creates a by-product. Refining oil, created gasoline (petrol) as a by-product – with the advent of the petrol engine, the by-product became more desirable than the initial product of kerosene.
Alfred Marshall on Joint supply
“We may now pass to consider the case of joint products: i.e. of things which cannot easily be produced separately; but are joined in a common origin, and may therefore be said to have a joint supply, such as beef and hides, or wheat and straw.
As there is a joint demand for things joined in a common destination: so there is a joint supply of things which have a common origin.”
Marshall, Alfred. Principles of Economics (1890) Book five, chapter six.
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