2013 Volume 12 Pages 75-101
First, the basic concept of the author’s previous multi-country multicommodity Ricardian model including intermediate goods is made clear by using an improved model with two countries and two goods, which is applicable even in cases in which the relative prices of each good change. Then, as a new example of the application of this multi-country multi-commodity model, in the context of the trade area consisting of Japan, the U.S., and China, this study examines how the pattern of specialization suggested by this optimal solution changes when maximization of total GDPs in the trade area is planned under the restriction that targeted reduction of Japanese intermediate demand for electricity is imposed, as compared to the case without this restriction. The results are as follows. When the intermediate demand for Japanese electricity is restricted, the optimal solution suggests that Japan should increase the output of the forestry sector and decrease the output of transportation equipment, etc. This is the reverse pattern of the specialization in the case without the restriction. The reason for this reversal is that, as in other countries, Japanese forestry has a substantially lower input of electricity than other sectors and, therefore, has the possibility of providing a comparative advantage even though its relative labor productivity is low.
