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Incorporating Transportation Network Structure in Spatial Econometric Models of Commodity Flows

Author

Listed:
  • LeSage, James P.

    (Department of Economics, University of Toledo)

  • Polasek, Wolfgang

    (Department of Economics and Finance, Institute for Advanced Studies, Vienna, Austria)

Abstract

We introduce a regression-based gravity model for commodity flows between 35 regions in Austria. We incorporate information regarding the highway network into the spatial connectivity structure of the spatial autoregressive econometric model. We find that our approach produces improved model fit and higher likelihood values. The model accounts for spatial dependence in the origin-destination flows by introducing a spatial connectivity matrix that allows for three types of spatial dependence in the origins to destinations flows. We modify this origin-destination connectivity structure that was introduced by LeSage and Pace (2005) to include information regarding the presence or absence of a major highway/train corridor that passes through the regions. Empirical estimates indicate that the strongest spatial autoregressive effects arise when both origin and destination regions have neighboring regions located on the highway network. Our approach provides a formal spatial econometric methodology that can easily incorporate network connectivity information in spatial autoregressive models.

Suggested Citation

  • LeSage, James P. & Polasek, Wolfgang, 2006. "Incorporating Transportation Network Structure in Spatial Econometric Models of Commodity Flows," Economics Series 188, Institute for Advanced Studies.
    • Handle: RePEc:ihs:ihsesp:188
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    File URL: https://irihs.ihs.ac.at/id/eprint/1701
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    References listed on IDEAS

    as
    1. Brian Cushing & Jacques Poot, 2004. "Crossing boundaries and borders: Regional science advances in migration modelling," Advances in Spatial Science, in: Raymond J. G. M. Florax & David A. Plane (ed.), Fifty Years of Regional Science, pages 317-338, Springer.
    2. Olivier Parent & James Lesage, 2005. "Bayesian Model Averaging for Spatial Econometric Models," Post-Print hal-00375489, HAL.
    3. James P. LeSage & R. Kelley Pace, 2008. "Spatial Econometric Modeling Of Origin‐Destination Flows," Journal of Regional Science, Wiley Blackwell, vol. 48(5), pages 941-967, December.
    4. A. Porojan, 2001. "Trade Flows and Spatial Effects: The Gravity Model Revisited," Open Economies Review, Springer, vol. 12(3), pages 265-280, July.
    5. Geweke, J, 1993. "Bayesian Treatment of the Independent Student- t Linear Model," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 8(S), pages 19-40, Suppl. De.
    6. Ming-Long Lee & R. Kelley Pace, 2005. "Spatial Distribution of Retail Sales," The Journal of Real Estate Finance and Economics, Springer, vol. 31(1), pages 53-69, August.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Commodity flows; Spatial autoregression; Bayesian; Maximum likelihood; Spatial connectivity of origin-destination flows;
    All these keywords.

    JEL classification:

    • R1 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics
    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise
    • L92 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Railroads and Other Surface Transportation
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models

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