**1. Introduction**

Licorice has been used as a medicine for over 2000 years. The first mention of its use as a drug for treating wounds is found in a Chinese traditional medicine book from the second century BC [1]. Similarly, licorice has been widely used in Japan, including in the pharmaceutical industry [2]. Despite the high demand, there is no strain of licorice that is native to Japan, meaning that the licorice used in Japanese pharmaceutical products is mostly imported from places such as China and the Middle East [2]. However, recent years have brought changes to the market, as excessive harvesting has depleted the licorice resources in China [3]. This has caused the price of licorice to increase year by year. As the price of Chinese licorice is expected to remain high, it

© 2017 The Author(s). Licensee InTech. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. © 2017 The Author(s). Licensee InTech. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

will become difficult for the Japanese pharmaceutical industry to continue to purchase Chinese licorice. In the worst case, the supply of Chinese licorice will be severely constrained.

To avoid this situation, consumers of Chinese licorice in Japan must seek an alternative source. However, this is not an easy task since other countries are hardly able to supply a substitute for Chinese licorice. This study focuses, instead, on attempts to cultivate licorice as a means to mitigate the high price of Chinese licorice.

In this paper, we examine data, such as the price and trading volume of licorice between China and Japan, to analyze the licorice market from an economic perspective. While numerous publications have analyzed the various properties of licorice, studies incorporating economic ideas are rare. To make this study understandable to readers who are unfamiliar with eco‐ nomics, we attempt to limit ourselves to basic economic concepts rather than more special‐ ized ones.

The rest of this paper is organized as follows. In Section 2, we consider the recent situation surrounding Japanese licorice imports from China by examining relevant trade data. In Section 3, we briefly explain some basic economic ideas, which are then discussed in Section 4. Section 5 considers potential solutions, such as efforts to cultivate licorice, and Section 6 concludes the chapter.
