An
economic model that tries to describe the situation wherein the production of one item actually leads to the production of two (or more items.) For example, if you raise beef cows, for each cow you raise you have a certain amount of beef to sell and a hide.
The firm faces two demand curves, one for the primary market (say beef) and the demand curve in a secondary market (leather). The interesting thing about joint products is that is sometimes beneficial to a monopolistic firm to not sell a portion of the second product. If the firm is allowed to "dump" a portion of the second product (if not restricted by law or very expensive disposal costs,) the firm will produce a quantity of the good to maximize profits in the primary market (ie where marginal costs = marginal revenue in the primary market), but this quantity will be greater than the optimal (economically efficient) production of the secondary product.
Because the secondary market faces a lower demand curve, it has a correspondingly lower marginal revenue curve. The firm will sell as much of the second product as it can without starting to make a loss (ie it will maximize profits in the secondary market and sell a quantity where marginal cost equals marginal benefits.) After that point, the firm will no longer sell any of the secondary product, although they may continue to manufacture the product (cows) in order to get more of the first product (beef).
As it becomes more expensive for the firm to dispose of the second product, or if "dumping" is prohibited by law, the firm will produce less of the product, so less of the first product and more of the second will be sold; overall a loss in both consumer surplus and producer surplus.