The Brexit Game: Uncertainty and Location Decision

23 Pages Posted: 17 Jul 2019

See all articles by Douglas Silveira

Douglas Silveira

University of Alberta - Department of Economics

Izak Carlos Silva

Universidade Federal de Juiz de Fora - Department of Economics

Silvinha Vasconcelos

Universidade Federal de Juiz de Fora - Department of Economics

Fernando Salgueiro Perobelli

Universidade Federal de Juiz de Fora

Date Written: July 16, 2019

Abstract

This article aims to analyze the strategic decision about firms location choice faced with the uncertainty surrounding Brexit. We combine Evolutionary Game Theory (EGT) and spatial Agent-based Simulation (ABS) approaches with input-output analysis. Firms are competing in two different sectors: (a) crop and animal production; (b) financial service activities. We separate the European Union in manifold regions and consider the following factors in the decision making: (i) market potential; (ii) productive integration; (iii) labor costs and (iv) displacement cost. Firms assign weights to each of these factors. Our results suggest that in traditional sectors firms tend to seek unsaturated markets. In sectors related to services, the greater the uncertainty, the greater the likelihood that firms will move.

Keywords: Firms' Location Decision, Brexit, Input-Output Analysis

JEL Classification: R30, C70, F15

Suggested Citation

Silveira, Douglas and Silva, Izak Carlos and Vasconcelos, Silvinha and Perobelli, Fernando Salgueiro, The Brexit Game: Uncertainty and Location Decision (July 16, 2019). Available at SSRN: https://ssrn.com/abstract=3421196 or http://dx.doi.org/10.2139/ssrn.3421196

Douglas Silveira (Contact Author)

University of Alberta - Department of Economics ( email )

Edmonton, Alberta T6G 2R6
Canada

Izak Carlos Silva

Universidade Federal de Juiz de Fora - Department of Economics ( email )

Juiz de Fora, Minas Gerais
Brazil

Silvinha Vasconcelos

Universidade Federal de Juiz de Fora - Department of Economics

Juiz de Fora, Minas Gerais
Brazil

Fernando Salgueiro Perobelli

Universidade Federal de Juiz de Fora ( email )

Brazil

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
70
Abstract Views
425
rank
403,696
PlumX Metrics