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 Section 45.4 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, multiregional input-output models. Section 45.5 discusses how to construct and add an interregional consumption function to obtain the type II interregional interindustry model. Section 45.6 outlines further extensions, all through to the most complex price-quantity interacting interregional demo-economic model LINE. Finally, an Appendix presents the microeconomic foundation for the Leontief model and compares it with the alternative supply-driven quantity model and its demand-pull price dual.