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From Odwiki

Gouraud shading computes the colors at the vertices of polygons, then interpolates the colors across the polygon.

Unlike PhongShading, which computes illumination on the interior of polygons, Gouraud shading can miss subtle details on the interior of large polygons.

Gouraud shading is named after Henri Gouraud (and thus Gouraud should always be capitalized).

More information may be found at http://en.wikipedia.org/wiki/Henri_Gouraud (or you can edit their wiki).