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A propos Brexit: on the breaking up of integration areas – an NEG analysis

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  • Pasquale Commendatore
  • Ingrid Kubin
  • Iryna Sushko

Abstract

Inspired by Brexit, the paper explores the effects of splitting an integration area or ‘Union’ on trade patterns and the spatial distribution of industry. A linear three-region New Economic Geography (NEG) model is developed and two possible situations before separation are considered: agglomeration and dispersion. By analogy with the Brexit options, soft and hard separation scenarios are considered. Firms in the leaving region may move to the larger Union market, even on the periphery, relocation substituting trade; or firms in the Union may move in the more isolated leaving region, escaping from competition. The paper also analyses deeper Union integration following separation. Instances of multistability and complex dynamics are found.

Suggested Citation

  • Pasquale Commendatore & Ingrid Kubin & Iryna Sushko, 2021. "A propos Brexit: on the breaking up of integration areas – an NEG analysis," Spatial Economic Analysis, Taylor & Francis Journals, vol. 16(1), pages 97-120, January.
    • Handle: RePEc:taf:specan:v:16:y:2021:i:1:p:97-120
    DOI: 10.1080/17421772.2019.1701702
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