The Adjustment of Interregional Input-Output Coefficients under Heterogeneous Price Sensitivity: A Linearized Model.

In this paper, an interregional general equilibrium model is presented which combines a linear structure with factor substitution under heterogeneous price sensitivity among industries. The model is an extension of the MRVIO model proposed by Liew and Liew (1984) and is compared with others in the field of interregional computable general equilibrium models. A simple numerical exercise is carried out to assess the impact of alternative hypotheses (about elasticities of substitution) on the model's performance.