Having defined technology, preferences and compensated demand functions, we now may turn to the market clearance conditions.
Domestic output equals demand for intermediate inputs to production, public sector use, final consumer demand plus domestic investment:11
in which airD,I, airD,G, and airD,C represent the compensated demands for domestic inputs by submarket, each of which are functions of pirD and pirM.
Aggregate supply of imports, defined by the Armington aggregation across imports from different regions must equal aggregate import demand for intermediate, public and private consumption:
in which airM,I, airM,G, and airM,C represent compensated demands for imported inputs by submarket, each functions of pirD and pirM.
Export supplies equals import demand across all trading partners plus demands for international transport:12
In the second equation airsM represents the unit demand for region r output per unit of region s aggregate imports.
The model includes supply-demand conditions for the Armington composite goods entering intermediate demand, public and private demand, as has already been specified above in the equations defining IDir, GDir and CDir.
Primary factor (labor, capital, land, resource) endowment equals primary factor demand: