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Direct demand is the demand that the primary agent has for something. The primary agent desires the good or service for themselves.
Indirect demand is the demand that arises for something by a secondary agent due to an interaction that occurs corresponding to the primary agent.
For example: If a federal mandate occurs for ethanol to be blended at a level for the entire transportation fuel supply, the increase in corn demanded for producing ethanol is an indirect demand. The mandate may not be for corn use, but there is indirect demand for corn.
However, consider that the ethanol production facilities that utilize corn for the production of ethanol have a direct demand for corn.
The indirect demand for corn arises from the original demand for ethanol. The designation of direct or indirect is a matter of perspective for the question being asked.
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