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	Computable General Equilibrium	Location Quotient
Field	Economics	Economics
Family	Process / pipeline	Process / pipeline
Year of origin	1960	1960
Originator	Leif Johansen; developed by Herbert Scarf, John Shoven & John Whalley	Developed in regional science; codified by Walter Isard
Type	Multi-market numerical equilibrium simulation model	Descriptive index of relative regional concentration
Seminal source	Shoven, J. B., & Whalley, J. (1992). Applying General Equilibrium. Cambridge Surveys of Economic Literature. Cambridge University Press. ISBN: 9780521319867	Isard, W. (1960). Methods of Regional Analysis: An Introduction to Regional Science. Cambridge, MA: MIT Press. ISBN: 9780262090032
Aliases	CGE Model, Applied General Equilibrium, AGE Model, Walrasian Simulation Model	LQ, Coefficient of Localization, Regional Specialization Ratio
Related	3	3
Summary	A computable general equilibrium (CGE) model is a numerical simulation of an entire economy in which optimizing producers and consumers interact through markets that all clear simultaneously. Building on Walras's general-equilibrium theory and a benchmark social accounting matrix, a CGE model is calibrated to reproduce a base-year economy and then solved for the new vector of prices and quantities that would prevail under a counterfactual policy — a tax reform, a tariff change, a carbon price — capturing how the shock reverberates and re-equilibrates across every market.	The location quotient (LQ) is a simple descriptive index that measures how concentrated an industry is in a region relative to a larger reference area, usually the nation. It is the ratio of the industry's share of local employment (or output) to its share of national employment. An LQ above one means the region is more specialized in that industry than the nation as a whole; an LQ below one means it is under-represented.