Modelling Commodity Flows on Trade Networks: Retrospect and Prospect

  • David F. Batten
  • Lars Westin


In this chapter we examine various analytical approaches which are pertinent to an important area of research in which, according to Isard and Dean ([30]), regional scientists ought to be more actively involved. This is the estimation of commodity flow (or trade share) matrices across world trade networks. Although spatial variables such as distance, location and transport cost clearly have a significant impact on the quantity and structure of trade, these effects are often ignored or downplayed by international trade economists. Our task is to redress this imbalance partly by strengthening the case for combined spatial interaction-equilibrium approaches to world trade analysis.


Gravity Model Trade Flow Computable General Equilibrium Regional Scientist Computable General Equilibrium Model 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.


  1. [1]
    N.D. Aitken, ‘The Effect of the EEC and EFTA on European Trade: A Temporal Cross-Section Analysis’, American Economic Review, vol. 63, (1973), pp. 881–92.Google Scholar
  2. [2]
    J.E. Anderson, ‘A Theoretical Foundation for the Gravity Equation’, American Economic Review, vol. 69, (1979), pp. 106–16.Google Scholar
  3. [3]
    A. Anas, ‘Discrete Choice Theory, Information Theory and the Multinomial Logit and Gravity Models’, Transportation Research B, 17B, (1983), pp. 13–23.[4] P.S. Armington, ‘A Theory of Demand for Products Distinguished by Place of Production’, IMF Staff Papers (1969).Google Scholar
  4. [5]
    K.J. Arrow and G. Debreu, ‘Existence of an Equilibrium for a Competitive Economy’, Econometrica, vol. 22, (1954), pp. 265–90.CrossRefGoogle Scholar
  5. [6]
    D. Batten and D. Boyce. ‘Spatial Interaction, Transportation, and Interregional Commodity Flow Models’, in P. Nijkamp (ed.), Handbook of Regional and Urban Economics, vol. I. (Amsterdam: North-Holland, 1986) .Google Scholar
  6. [7]
    D. Batten and B. Johansson, ‘Price Adjustments and Multiregional Rigidities in the Analysis of World Trade’, Papers of the Regional Science Associa­tion, vol. 56, (1985), pp. 145–66.CrossRefGoogle Scholar
  7. [8]
    J.H. Bergstrand, ‘The Gravity Equation in International Trade: Some Microeconomic Foundations and Empirical Evidence’, The Review of Economics and Statistics, vol. 67, (1985), pp. 474–81.CrossRefGoogle Scholar
  8. [9]
    J. Bröcker, ‘Interregional Trade and Economic Integration. A Partial Equilibrium Analysis’, Regional Science and Urban Economics, vol. 18, (1988) , pp. 261–81.Google Scholar
  9. [10]
    P.A. Buckley, An Interregional Computable General Equilibrium Model for National - Regional Policy Impact Analysis. (Umeä: CERUM Working Paper, 1987/5).Google Scholar
  10. [11]
    S. Dafermos, ‘Traffic Equilibrium and Variational Inequalities’, Transportation Science, vol. 14, (1980), pp. 42–54.CrossRefGoogle Scholar
  11. [12]
    G. Debreu, The Theory of Value (New York: Wiley, 1959).Google Scholar
  12. [13]
    K. Dervis, J. de Melo and S. Robinson, General Equilibrium Models for Development Policy (New York: Cambridge University Press, 1982).Google Scholar
  13. [14]
    A.K. Dixit and V. Norman, Theory of International Trade (Cambridge University Press, 1980).Google Scholar
  14. [15]
    A.K. Dixit and J.E. Stiglitz, ‘Monopolistic Competition and Optimum Product Diversity’, American Economic Review, vol. 67, (1977), pp. 297–308.Google Scholar
  15. [16]
    T.L. Friesz, R.L. Tobin, T.E. Smith and P.T. Harker, ‘A Nonlinear Complementarity Formulation and Solution Procedure for the General Derived Demand Network Equilibrium Problem’, Journal of Regional Science, vol. 23, (1983), pp. 337–59.CrossRefGoogle Scholar
  16. [17]
    V.J. Geraci and W. Prewo, ‘Bilateral Trade Flows and Transport Cost’, The Review of Economics and Statistics, vol. 59, (1977), pp. 67–74.CrossRefGoogle Scholar
  17. [18]
    V. A. Ginsburgh and J.L. Waelbroeck, Activity Analysis and General Equilibrium Modelling (Amsterdam; North-Holland, 1981).Google Scholar
  18. [19]
    M.L. Greenhut, G. Norman and C-S Hung, The Economics of Imperfect Competition: a Spatial Approach. (Cambridge University Press, 1987).Google Scholar
  19. [20]
    H. Haken, Advanced Synergetics (Berlin, Heidelberg: Springer-Verlag, 1987) .Google Scholar
  20. [21]
    P.T. Harker (ed.), Spatial Price Equilibrium: Advances in Theory, Computation and Application (Berlin, Heidelberg: Springer-Verlag 1985).Google Scholar
  21. [22]
    P. Harker, ‘Dispersed Spatial Price Equilibrium’, Environment and Planning, A, vol. 20, (1988), pp. 353–68.CrossRefGoogle Scholar
  22. [23]
    J.M. Hartwick and M. Spencer, ‘An Oil-Exporting versus an Industrialized Region’, in Å.E. Andersson, D.F. Batten, B. Johansson and P. Nijkamp (eds), Advances in Spatial Theory and Dynamics (Amsterdam: North Holland, 1988).Google Scholar
  23. [24]
    H. Hashimoto, ‘A Spatial Nash Equilibrium Model’, in P.T. Harker (ed.), Spatial Price Equilibrium: Advances in Theory, Computation and Applica­tion. Lecture Notes in Economics and Mathematical Systems, 249 (Berlin, Heidelberg: Springer-Verlag, 1985).Google Scholar
  24. [25]
    E. Helpman and P.R. Krugman, Market Structure and Foreign Trade (Cambridge, Massachusetts: The MIT Press, 1985).Google Scholar
  25. [26]
    G.J.D. Hewings and R.C. Jensen, ‘Regional, Interregional and Multiregional Input-Output Analysis’, in P. Nijkamp (ed.), Handbook of Regional and Urban Economics, vol. I. (Amsterdam: North-Holland, 1986).Google Scholar
  26. [27]
    J.R. Hicks, Capital and Growth (Oxford University Press, London, 1965).Google Scholar
  27. [28]
    P.J. Higgs, B.R. Parmenter and R.J. Rimmer, ‘A Hybrid Bottoms-up Regional Computable General Equilibrium Model’, Working Paper from the Impact Project (University of Melbourne, 1987).Google Scholar
  28. [29]
    W. Isard, ‘Interregional and Regional Input-Output Analysis: A Model of a Space-Economy, The Review of Economics and Statistics, vol. 33, (1951), pp. 318–28.Google Scholar
  29. [30]
    W. Isard and W. Dean. ‘The Projection of World (Multiregional) Trade Matrices’, Environment and Planning A, vol. 19, (1987), pp. 1059–66.Google Scholar
  30. [31]
    W. Isard and D.J. Ostroff, ‘Existence of Competitive Interregional Equilibrium’, Papers and Proceedings of the RSA, vol. 4, (1958), pp. 49–76.Google Scholar
  31. [32]
    L. Johansen, A Multisectoral Study of Economic Growth (Amsterdam:North-Holland, 1960).Google Scholar
  32. [33]
    L. Johansen, Production Functions (Amsterdam: North-Holland, 1972).Google Scholar
  33. [34]
    B. Johansson and U. Strömqvist, Regional Rigidities in the Process of Economic Structural Development, Regional Science and Urban Econ­omics, vol. 11 (1981), pp. 363–75.Google Scholar
  34. [35]
    B. Johansson and L. Westin, ‘Technical Change, Location and Trade’, Papers of the Regional Science Association, vol. 62, (1987), pp. 13–25.CrossRefGoogle Scholar
  35. [36]
    G.G. Judge and T. Takayama (eds), Studies in Economic Planning over Space and Time. (Amsterdam: North-Holland, 1973).Google Scholar
  36. [37]
    P. Krugman, ‘Import Protection as Export Promotion: International Competition in the Presence of Oligopoly and Economies of Scale’, in Kierzkowski (ed.) Monopolistic Competition and International Trade, (Oxford: Clarendon Press, 1984).Google Scholar
  37. [38]
    R.E. Kuenne, The Theory of General Economic Equilibrium (Princeton:Princeton University Press, 1963).Google Scholar
  38. [39]
    R.E. Kuenne, ‘The Dynamics of Oligopolistic Location: Present Status and Future Directions’, in Å.E. Andersson et al. (eds), Advances in Spatial Theory and Dynamics (Amsterdam: North-Holland, 1988).Google Scholar
  39. [40]
    L.H. Liew, ‘A Johansen Model for Regional Analyses’, Regional Science and Urban Economics, vol. 14, (1984), pp. 129–46.CrossRefGoogle Scholar
  40. [41]
    C.K. Liew and C.J. Liew, ‘Multi-Modal, Multi-Output, Multi-Regional Variable Input-Output Model’, Regional Science and Urban Economics, vol. 14, (1984), pp. 265–81.CrossRefGoogle Scholar
  41. [42]
    B.R. Lyons, ‘The Pattern of International Trade in Differentiated Products: An Incentive for the Existence of Multinational Firms’, in H. Kierzkowski (ed.), Monopolistic Competition and International Trade (Oxford: Claren­don Press, 1984).Google Scholar
  42. [43]
    J.R. Madden, The Structure of the Tasmain Model, IAESR (University of Melbourne, 1987).Google Scholar
  43. [44]
    L. Mathiesen, ‘Marginal Cost Pricing in a Linear Programming Model: A Case with Constraints on Dual Variables’, Scandinavian Journal of Econ­omics, (1977), vol. 79, pp. 468–77.Google Scholar
  44. [45]
    L. Mathiesen, ‘Computation of Economic Equilibria by a Sequence of Linear Complementarity Problems’, Mathematical Programming Study, vol. 23, (1985), pp. 144–62.CrossRefGoogle Scholar
  45. [46]
    A. Nagurney, ‘Competitive Equilibrium Problems, Variational Inequalities and Regional Science’, Journal of Regional Science vol. 27, (1987), pp. 503–17.Google Scholar
  46. [47]
    B. Ohlin, Interregional and International Trade (Cambridge: Harvard University Press, 1933).Google Scholar
  47. [48]
    K. Peschel, ‘On the Impact of Geographic Distance on the Interregional Patterns of Production and Trade’, Environment and Planning A, vol. 13, (1981), pp. 605–22.CrossRefGoogle Scholar
  48. [49]
    P.A. Samuelson, ‘Spatial Price Equilibrium and Linear Programming’, American Economic Review, vol. 42, (1952), pp. 283–303.Google Scholar
  49. [50]
    H. Scarf, (with T. Hansen) The Computation of Economic Equilibrium (NewHaven, Conn.: Yale University Press, 1973).Google Scholar
  50. [51]
    F. Scherer, Industrial Market Structure and Economic Performance (Chicago:Rand McNally, 1980).Google Scholar
  51. [52]
    E. Sheppard and L. Curry, ‘Spatial Price Equilibria’, Geographical Analysis, vol. 14, (1982), pp. 279–304.CrossRefGoogle Scholar
  52. [53]
    J.B. Shoven and J. Whalley, ‘On the Computation of Competitive Equilibrium on International Markets with Tariffs’, vol. 4, (1974), Journal of International Economics, pp. 341–54.Google Scholar
  53. [54]
    J.B. Shoven and J. Whalley, ‘Applied General-Equilibrium Models of Taxation and International Trade. An Introduction and Survey’, Journal of Economic Literature, vol. 22, (1984), pp. 1007–51.Google Scholar
  54. [55]
    T.E. Smith, ‘A Cost-Efficiency Principle of Spatial Interaction Behaviour’, Regional Science and Urban Economics, vol. 8, (1978), pp. 313–38.CrossRefGoogle Scholar
  55. [56]
    A.M. Spence, ‘Product Selection, Fixed Costs, and Monopolistic Competition’, Review of Economic Studies, vol. 43, (1976), pp. 217–36.CrossRefGoogle Scholar
  56. [57]
    T.N. Srinivasan and J. Whalley (eds), General Equilibrium Trade Policy Modelling. (Cambridge, Mass.: The Mit Press, 1986).Google Scholar
  57. [58]
    Ko Suknam and G.J.D. Hewings, ‘A Regional Computable General Equilibrium Model for Korea’, Korean Journal of Regional Science, vol. 2, (1987).Google Scholar
  58. [59]
    T. Takayama and G.G. Judge, ‘Equilibrium among spatially separated markets. A Reformulation’, Econometrica, vol. 32, (1964), pp. 510–24.CrossRefGoogle Scholar
  59. [60]
    T. Takayama and G.G. Judge, Spatial and Temporal Price and Allocation Models (Amsterdam: North-Holland, 1971).Google Scholar
  60. [61]
    T.H. Takayama, Hasimoto and N.D. Uri, ‘Spatial and Temporal Price and Allocation Modelling: Some Extensions’, Socio-Econ. Plan. Sei., vol. 18, (1984) , pp. 227–34.Google Scholar
  61. [62]
    T. Takayama and W.C. Labys, ‘Spatial Equilibrium Analysis’, in P. Nijkamp (ed.), Handbook of Regional and Urban Economics, vol. I. (Amsterdam: North-Holland, 1986).Google Scholar
  62. [63]
    T. Takayama and A.D. Woodland, ‘Equivalence of Price and Quantity Formulations of Spatial Equilibrium: Purified Duality in Quadratic and Concave Programming’, Econometrica, vol. 38, (1970), pp. 889–906.CrossRefGoogle Scholar
  63. [64]
    J. Tinbergen, Shaping the World Economy: Suggestions for an International Economic Policy (New York: Twentieth Century Fund, 1962).Google Scholar
  64. [65]
    J. Whalley, Trade Liberalization Among Major World Trading Areas (Cambridge, Mass.: The MIT Press, 1985).Google Scholar
  65. [66]
    L. Westin, ‘An Applied Short Run Interregional Equilibrium Vintage Model’, Australian Journal of Regional Studies, no. 3, (1988), pp. 3–11.Google Scholar

Copyright information

© Manas Chatterji and Robert E. Kuenne 1990

Authors and Affiliations

  • David F. Batten
  • Lars Westin

There are no affiliations available

Personalised recommendations