Interregional Input-Output Models

This chapter presents and critically evaluates the economic assumptions and applicability of a series of regional and interregional interindustry models. It begins with the demand-driven, single-region Leontief quantity model and its cost-push price dual. Then Sect. 4 discusses the ideal, full information, interregional input-output model with interregional spillover and feedback effects at length, and compares it with the requirements and assumptions of more limited information, multi-regional input-output models. Section 5 discusses how to construct and add an interregional consumption function to obtain the Type II interregional interindustry model. Section 6 outlines further extensions, all through to the most complex price-quantity interacting interregional demo-economic model LINE. Finally, an Appendix presents a micro-economic foundation for the Leontief model, and compares it with the alternative supply-driven quantity model and its demand-pull price dual.