Leontief Analysis of a Coal Town

An Interactive Applet powered by Sage and MathJax.

(By Gregory V. Bard)


Overview

In this interact, you will model the economy of a small coal producing region (such as West Virginia). This will be a small and simple example of Leontief Input-Output Analysis. We will track three industries: coal, electricity, and railways.

Coal is produced from mines, but railways are required to transport the ore to the refinery, which runs on electricity. Power plants burn the coal to make electricity, but they need railways to bring them the coal. The railroads run partly on electricity and partly on coal to deliver these resources. While there is no consumer demand nor external demand for the rail network connecting the coal mines, refineries, and power plants, there certainly is lots of demand for electric power among the commercial, residential and other industrial sectors. There is also some external industrial demand for coal---for example, in making steel out of iron.

Instructions

The insturctions for this one are really easy...

Just move the sliders around until you have a surplus of 10 million in coal, 100 million in electricity, and 0 in rails. Remember, the unit is millions of dollars, therefore 10.0000000000 really means $10,000,000.

If you are curious how the interact works internally, you might want to click "show audit."

Discussion

Since there's not much written here, you might think that I don't have too much more to say about Leontief Input-Output Analysis. However, I have written an entire 10-page worksheet on this topic.


Last modified on November 14th, 2014.