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I concluded as follows in my paper (see Theorem 2).
We may conclude as follows.If capital and labor, domestic factors,are economy-wide complements... the reduction of import restrictions which decreases the domestic price of importables can decreasethe commodity output of exportables.
The energy price - commodity output relationship and the commodity price - commodity output relationship in a three-factor, two-good general equilibrium trade model with imported energy | Request PDF. Available from: https://www.researchgate.net/publication/321347535_The_energy_price_-_commodity_output_relationship_and_the_commodity_price_-_commodity_output_relationship_in_a_three-factor_two-good_general_equilibrium_trade_model_with_imported_energy [accessed Oct 15 2018].
Maybe, you mean the cross price effect on consumption! It means Complementarity! I know about it!
If I add consumption in the 3 x 2 model, and perfect employment does not exist, I think that the cross price effect on output can occur. I only think. But my model does not include consumption.
If you add consumption , I think a model would be more comprehensive because it includes a demand side which is important in my opinion .
Thank you! My 3 x 2 model is traditional trade mmodel. This implies that free trade can decrease the output in exportable sector. Paradoxical!
My paper does not mean Positive Output! Cross price effect can be positive in my model! This implies that free trade agreement reducing import tariff can decrease the output in exportable sector.
Hi dear Yosniaki Nakasa
cross price elasticity of demand We are looking here at the effect that changes in relative prices within a market have on the pattern of demand. With cross elasticity we make an important distinction between substitute and complementary products. positive price elasticity of demand" would mean that people are willing to buy more of a certain good when the price is higher. But we know that the world doesn't really work this way. The higher the price, the fewer people will buy it . The price elasticity of demand measures the responsiveness of quantity demanded to a change in price. If the price of something goes up for a normal good, the quantity demanded will be less. People will buy fewer at a higher price. Similarly, if the price goes down, people will buy more. This means that an inverse relationship exists between price and quantity, and why the demand curve is downward-sloping. Because of the inverse relationship, the price elasticity of demand is negative, not positive. You are basically dividing a percentage change in quantity by a percentage change in price; one will go up (be positive), the other will go down (be negative) due to this inverse relationship. When you divide two numbers, one positive and one negative, the result is a negative number.
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