In estimating regional trade, LQ index is not proper in applying to more
than 4 regions; first, the indeterministic nature of allocating regional trades
among regions is shown; second, cross-hauling is not captured in the LQ
method, which is generally induced in actual regional trade; third, demand
constraints are imposed on regional industrial demands for holding
demand-production equilibrium. Therefore the LQ index calculated based on
the original data, is changed by the equilibrium condition. This is due to the
fact that LQ index does not include the distance-decay variables that control
regional trade among regions. Thereby, the internal consistency in a model
can not be held in LQ model. The estimates by the model may not be
applicable to explain regional trade structures and can not be used as a general
model to estimate regional trades. We suggest alternative models such as
production-demand constraint gravity model and entropy maximization model
for estimating the trade volume and structure.