The impact of Brexit on trade patterns and industry location: a NEG analysis

Nov 15, 2018


Kartepe, Kocaeli, Turkey



We explore the effects of Brexit on trade patterns and on the spatial distribution of industry between the United Kingdom and the European Union and within the EU. Our study adopts a new economic geography (NEG) perspective developing a linear model with three regions, the UK and two separated regions composing the EU. The three-region framework and linear demands allow for different trade patterns. Two possible ante-Brexit situations are possible, depending on the interplay between local market size, local competition and trade costs: industrial agglomeration or dispersion. Considering a soft and a hard Brexit scenario, the ante-Brexit situation is altered substantially, depending on which scenario prevails. UK firms could move to the larger EU market, even in the peripheral region, reacting to the higher trade barriers, relocation representing a substitute for trade. Alternatively, some EU firms could move in the more isolated UK market finding shelter from the competition inside the EU. We also consider the post-Brexit scenario of deeper EU integration, leading to a weakening of trade links between the EU and the UK.

  • Pasquale Commendatore
    Pasquale Commendatore


    University of Naples 'Federico II'


    Born in 03/12/1967 at Roncofreddo (FC), Italy, Pasquale Commendatore is currently Full Professor of Economics at the University of Naples ‘Federico II’, Italy. From 18/01/2005 to 17/12/2010 he has been Associate Professor and from 01/07/1999 to 18/01/2005 researcher at the University of Naples ‘Federico II’. In 2001, PhD in Economics and Econometrics at the University

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