Leontief Price Model

The Leontief price model is the cost-side dual of the quantity input-output system: instead of asking how much each sector must produce to meet final demand, it asks what unit price each sector must charge to cover its intermediate-input costs plus its primary-input (value-added) payments. Solving the dual equation p' = p'A + v' gives p' = v'(I − A)^{-1}, so the same Leontief inverse that propagates quantities also propagates costs, making the model the standard tool for tracing how a change in wages, taxes, or imported-input prices pushes through the entire price structure.