This paper concerns the following problem: in the usual interregional input-output analysis, the inverse matrix only shows the ultimate total effects of interregional propagation, but we cannot draw any information on the partial interactions between two or three regions which night be thought to have structurally different characters. How, then, is it best taken into account?
This paper can be divided into two parts. In the first part, we consider the theoretical framework to clarify the problem of this type. There, we formulate the “general model partitioned into three regions”, with meaningful notions.
In the second part, we apply our formula to the Interregional Input-Output Model of the Japanese Economy. Some empirical findings of this study are summarised there.