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Production possibilities and trade in a one-primary factor economy with public infrastructure

Author

Listed:
  • Makoto Tawada

    (Aichi Gakuin University)

  • Akihiko Yanase

    (Nagoya University)

Abstract

In this paper, we consider a Ricardian type of economy with public infrastructure, which is of “creation of atmosphere” type or “unpaid factor” type. We show that, although the production possibility frontier is convex in the creation of atmosphere type of infrastructure but is concave in the unpaid factor type, the optimal supply of public infrastructure increases according to an increase in the good that is more heavily dependent on the infrastructure along the production possibility frontier for both types. Subsequently, we showed that a country with larger labor endowment likely exports the good more heavily dependent on public infrastructure in the creation of atmosphere case, while that country likely exports the other good in the unpaid factor case.

Suggested Citation

  • Makoto Tawada & Akihiko Yanase, 2021. "Production possibilities and trade in a one-primary factor economy with public infrastructure," Asia-Pacific Journal of Regional Science, Springer, vol. 5(1), pages 169-189, February.
    • Handle: RePEc:spr:apjors:v:5:y:2021:i:1:d:10.1007_s41685-020-00162-8
    DOI: 10.1007/s41685-020-00162-8
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    References listed on IDEAS

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    1. Lutz Altenburg, 1992. "Some Trade Theorems with a Public Intermediate Good," Canadian Journal of Economics, Canadian Economics Association, vol. 25(2), pages 310-332, May.
    2. Akihiko Yanase & Makoto Tawada, 2012. "History‐Dependent Paths And Trade Gains In A Small Open Economy With A Public Intermediate Good," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 53(1), pages 303-314, February.
    3. Akihiko Yanase & Makoto Tawada, 2017. "Public infrastructure for production and international trade in a small open economy: a dynamic analysis," Journal of Economics, Springer, vol. 121(1), pages 51-73, May.
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