European Integration and the Functioning of Product Markets

European Integration and the Functioning of Product Markets

Edited by Adriaan Dierx, Fabienne Ilzkovitz and Khalid Sekkat

The book reveals that European product market integration has a significant impact on the conditions of competition, the strategies of companies and the structure of industry. It adds a quarter of a percentage to annual GDP growth rates and has not led to an increased exposure of the EU to asymmetric shocks. However, the book argues that further improvements in the functioning of European product markets are needed in order to improve the EU’s growth performance over the next decade. Invaluably, the book provides not only current information about Europe’s achievements in economic integration but also methodology to assess the outcome of economic integration in other regions of the World, such as NAFTA, MERCOSUR and ASEAN.

Chapter 1: Product market integration in the EU: an overview

Adriaan Dierx, Fabienne Ilzkovitz and Khalid Sekkat

Subjects: economics and finance, industrial economics


Adriaan Dierx, Fabienne Ilzkovitz and Khalid Sekkat The ten-year anniversary of the Single Market Programme (SMP) offers an excellent opportunity to look back and examine how economic integration has affected product market functioning in the European Union (EU). Although markets for goods and services have been influenced by other developments (for example, globalisation and Economic and Monetary Union (EMU)), the SMP remains an important driver of change in EU product markets. EMU, which should be seen as a subsequent stage in the continuing process of European integration, complements the SMP by facilitating cross-border transactions and making markets more transparent. The reduction in cross-border transaction costs and the elimination of exchange rate risk within the euro area are expected to stimulate trade and foreign investment. Moreover, the increased clarity of differences in price levels between Member States should encourage arbitrage and contribute to price convergence. This volume provides an in-depth analysis of the consequences of the on-going process of European market integration. It covers microeconomic aspects such as the level of competition, the strategic behaviour of firms and the structure and location of European industry as well as macroeconomic ones such as the impact of product market integration on growth and employment and on the European Union’s exposure to asymmetric shocks. The volume contains eight chapters. This opening chapter presents the analytical framework, which links together the different chapters of this book and gives an overview of its contents. The four following chapters deal with microeconomic aspects of integration. Chapter...

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