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How morphogen gradients govern the pattern of gene expression in developing tissues is not well understood. Here, we describe a statistical thermodynamic model of gene regulation that combines the activity of a morphogen with the transcriptional network it controls. Using Sonic hedgehog (Shh) patterning of the ventral neural tube as an example, we show that the framework can be used together with the principled parameter selection technique of approximate Bayesian computation to obtain a dynamical model that accurately predicts tissue patterning. The analysis indicates that, for each target gene regulated by Gli, which is the transcriptional effector of Shh signalling, there is a neutral point in the gradient, either side of which altering the Gli binding affinity has opposite effects on gene expression. This explains recent counterintuitive experimental observations. The approach is broadly applicable and provides …