Estimating inter-regional trade: the radiation model versus the gravity model

The estimation of interregional trade flows within a country is confined
to the context of multi-regional input–output models. Despite
the remarkable relevance of these trade flows for regional incomes,
most countries have almost no official data, with Korea being an
exception used here. In addition to survey-based estimation methods,
there are non-survey methods, some based on gravity models,
which can be used to estimate inter-regional trade flows. This paper
compares the gravity model with the novel radiation model. Preliminary
results show that the accuracy of the radiation model’s estimation
is superior to that of the gravity model, with the invaluable
benefit of not needing to estimate regression coefficients, unlike the
gravity model. This finding provides a generalisation of the radiation
model for estimating interregional trade in contexts where there
is no prior multi-regional input–output table without restrictions
derived from coefficient estimation as in the gravity model.