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percent for each 25-year period was assumed for the industrial 

 sector in all OECD countries (no change was assumed for the 

 other sectors for these countries), and a 10 percent improvement 

 was assumed for the single aggregate sector in other countries. 



The final energy factor which influences demand is energy 

 price. Each region has a unique set of energy prices which are 

 derived from world prices (determined in the energy balance 

 component of the model), transportation costs, and region-specific 

 taxes and tariffs. The model can be modified to accommodate 

 non-trading regions for any fuel or set of fuels. It is assumed 

 that no trade is carried on between regions in solar, nuclear, 

 or hydroelectric power, but that all regions trade other types of 

 fuels . 



The four secondary fuels (refined oil, refined gas, refined 

 coal, and electricity) are consumed to produce energy services. 

 In the three OECD regions (Regions 1, 2, and 3 in Figure B-2), 

 energy is consumed by three end-use sectors: residential/commer- 

 cial, industrial, and transportation. In the remaining regions, 

 final energy is consumed by a single aggregate sector. 



The demand for energy services in each region's end-use 

 sector(s) is determined by the cost of providing these services, 

 and the levels of income and population. The mix of secondary 

 fuels used to provide these services is determined by the relative 

 costs of providing the services using each alternative fuel. 



