This paper extends and applies the Marshallian derived demand model in the context of international trade. The model is utilized to derive estimates of the market equilibrium, net welfare, and welfare incidence effects of a hypothetical embargo of softwood log exports from the Pacific Coast region of the United States. The approach is potentially applicable to the analysis of various restrictions on primary products exports which may be instituted to maintain the viability of domestic processing industries. This paper estimates the efficiency and distributional effects of a hypothetical total embargo of softwood log exports from the Pacific Coast region (Washington, Oregon, and California). The issue is of considerable practical interest: restrictions, including an embargo on logs produced on federal lands in the region, have been in effect for more than ten years, and congressional hearings (D .S. Congress) periodically examine additional restriction options, including extending the scope of the embargo to logs from private lands. Discussions and analyses of the log export issue, including Haynes (1976) and Wiener, have yielded diverse opinions and estimates of present and potential effects, including conjecture on the extent of the "feedback" of increased foreign demand for processed domestic wood products resulting from foreclosure of the raw material source. In the following, limits to the extent of this potential feedback are identified and estimates of effects of log export prohibition are made for two limiting cases. Price and output effects and incidence of welfare impacts upon affected groups within the Pacific Coast region (PCR) are estimated for the two cases.Paarlberg and Thompson have used a multiproduct partial equilibrium model to analyze the effect of a tariff when goods are related. However, the relationships in their model con-The authors are, respectively, an associate professor of economics, Gonzaga University, and Senior Fellow, Resources for the Future.This research was undertaken as part of the Forest Economics and Policy Program of Resources for the Future. sist of nonzero cross-price elasticities of demand, rather than relatedness in production. Dardis carried out an analysis of gains from trade using a model that included an intermediate good and final product. The analysis did not employ an explicit derived demand model, and was limited to the small country (price taker) case. A small-country partial equilibrium model was also employed by Bautista in a study of effects of exchange rate changes on prices of a primary good and a processed commodity using the primary good as an input. Because fixed stocks of the goods were assumed, supply side impacts were not included in the analysis. The forest economics literature recognizes that the demand for logs is derived from the demand for lumber; however, an analysis that explicitly integrates the two markets is not available. Haynes, for example, deals only with the demand side of the markets and uses the "marketing margin" concept (Tomek and R...

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