Modelling Commodity Flows on Trade Networks : Retrospect and Prospect

Various approaches to the estimation of commodity flow or trade share matrices across world trade networks are examined. Some serious drawbacks associated with the use of spatial price equilibrium models are identified, and a case is made for combining two or more individual approaches, such as may be found in "dispersed" spatial price equilibrium models or in computable general equilibrium models which cater for spatial heterogeneity. It is found that some variant of the gravity model may be a reliable guide to trade share patterns in the long run, particularly in a world of differentiated products and increasing returns to scale. A conclusive finding is that quite different models ought to be adopted for different commodities (i.e. markets) in the short and medium term perspective.This paper has been written as a contribution to a forthcoming "Festschrift" in honour of Walter Isard (the founder of regional science). Financial support from the Swedish Transport Research Board (TFB) is acknowledged.