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<br />components of the 1-0 models based on the 1982 ratios and coefficients. The analyses results are <br />reported as output changes.9 <br /> <br />CGE Model Structure <br /> <br />The approach used in constructing the CGE model of the Colorado River seven state region <br />follows from the work of Shennan Robinson and his colleagues.lo This model assumes that the <br />economy is competitive; all prices are presumed to be able to adjust to clear factor and goods <br />markets; all consumers maximize utility; and all producers maximize profits (or, equivalently, <br />minimize costs). Production is characterized by constant returns to scale so that factor payments <br />exhaust the value of the product. Supply (domestic production plus imports) equals demand <br />(domestic consumption plus exports) in all markets. <br /> <br />The household sector is represented as utility-maximizing consumers; the production sector is <br />represented as profit-maximizing firms whose decisions determine the supply of goods and the <br />demand for factors of production (primary and intermediate inputs); international (interregional) <br />trade is represented; there is a government sector collecting taxes and providing collective goods; <br />and there are the market clearing conditions (may be based on assumptions concerning <br />equilibrium or disequilibrium outcomes). <br /> <br />The Social Accounts Matrix (SAM) provides a link between the National Income and Product <br />Accounts (NIPA) data, and the input-output accounts data. As such, it serves as a cornerstone of <br />the CGE models constructed using the Robinson method. The specific structure of the SAM is <br /> <br />9 Impacts on employment, wages, and taxes are also presented for the region and by sector in Brookshire <br />et al. (1993, 1994, 1995). <br /> <br />10 Models constructed via the "Robinson" approach are typically solved using computer programs designed <br />to solve large-scale systems of non-linear equations. The GAMS (General Algebraic Modeling System) software <br />was adopted to solve the model of the seven-state region. This package offers considerable flexibility in the <br />construction ofthe"CGE model and in conducting simulation analyses. See Dervis, de Melo and Robinson (1982), <br />Berck, Robinson, and Goldman (1991), and McKee et al. (1996) for a discussion of this class ofCGE model. <br /> <br />16 <br />