Regional Input - Output With Endogenous Internal and External Network

A major characteristic of dynamic regions or sets of dynamic regions is that external exports and imports are very significant in comparison with internally generated flows. Yet, it is precisely these flows of external exports and imports that are not evaluated in conventional regional input-output (I-O) analysis. The conventional approach merely determines internal flows of intermediate inputs. However, the total observable flows also contain internally generated flows to final demand, as well as external export flows, and external import flows to supply both intermediate inputs and final demand, implying five component flows. In most past models, the latter sets of flows have not been identified, with merely their totals at each region being assumed known. Although in recent work by the first author, internally generated regional flows to final demand were determined, certain of the regional external import and export flows were assumed to be available exogenously. This is quite an unrealistic expectation. In the following, all five sets of component flows are jointly determined, including transhipments of external exports and imports. In addition, rather than assuming just a single path between each set of regions, feasible multiple paths are assumed. A link/path transformation can then be made to obtain total link flows for each category, allowing a future consideration of congestion.