Review of World Economics

, Volume 136, Issue 2, pp 284–314 | Cite as

Non-Europe: The magnitude and causes of market fragmentation in the EU

  • Keith Head
  • Thierry Mayer
Articles

Abstract

Non-Europe: The Magnitude and Causes of Market Fragmentation in the EU. — In 1985 the European Commission diagnosed its member states as suffering from excessive market fragmentation, later referred to as “Non-Europe.” The authors examine the empirical basis for the Commission’s diagnosis using a trade model derived from monopolistic competition. They then investigate the links between the initial size and subsequent evolution of border effects within the EU. The findings support the view that European consumers act as if imports from other members were subject to high nontariff barriers. However, there appears to be almost no relationship between market fragmentation and the barriers that were identified and removed by Europe’s Single Market Programme.

F12 F15 

Zusammenfassung

“Non-Europe”: Grö\e und Ursachen von Marktzersplitterung in der EU. — Im Jahre 1985 stellte die EuropÄische Kommission fest, dass ihre Mitgliedstaaten unter erheblicher Marktzersplitterung litten, spÄter auch “Non-Europe” genannt. Die Verfasser überprüfen die empirische Grundlage für die Diagnose der Kommission und benutzen dazu ein Handelsmodell, das aus monopolistischer Konkurrenz abgeleitet ist. Sie untersuchen für die EU-LÄnder, wieviel auslÄndische Güter die Verbraucher im VerhÄltnis zu inlÄndischen Gütern bei gleicher Entfernung von den Produktionsstandorten nachgefragt haben und wie sich dieses VerhÄltnis im Laufe der Zeit verÄndert hat. Ihre Ergebnisse stützen die Ansicht, dass die europÄischen Verbraucher sich so verhalten, als seien die Importe aus anderen Mitgliedstaaten hohen nichttarifÄren Handelshemmnissen unterworfen. Allerdings scheint so gut wie keine Beziehung zwischen der Marktzersplitterung und den Hemmnissen zu bestehen, die durch Europas Programm des Einheitlichen Binnenmarktes identifiziert und beseitigt wurden.

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  1. Anderson, M., and S. Smith (1999). Do National Borders Really Matter? Canada-US Regional Trade Reconsidered.Review of International Economics 7(2): 219–227.CrossRefGoogle Scholar
  2. Anderson, S. P., A. De Palma, and J-F. Thisse (1992).Discrete Choice Theory of Product Differentiation. Cambridge: MIT Press.Google Scholar
  3. Bergstrand, J. (1985). The Gravity Equation in International Trade: Some Microeconomic Foundations and Empirical Evidence.Review of Economics and Statistics 67 (3): 474–481.CrossRefGoogle Scholar
  4. Buigues, P., F. Ilkovitz, and J-F. Lebrun (1990). The Impact of the Internal Market by Industrial Sector: The Challenge for Member States.European Economy, Social Europe, special edition. Office for Official Publications of the European Communities. Luxembourg.Google Scholar
  5. Commission of the EC (1988).Research on the Cost of Non-Europe. Office for Official Publications of the European Communities. Luxembourg.Google Scholar
  6. Eaton, J., and S. Kortum (1997). Technology and Bilateral Trade. National Bureau of Economic Research Working Paper 6253. Cambridge, Mass.Google Scholar
  7. Engel, C., and J. Rogers (1996). How Wide Is the Border?American Economic Review 86(5): 1112–1125.Google Scholar
  8. Fontagné, L., M. Freudenberg, and N. Péridy (1998). Intra-Industry Trade and the Single Market: Quality Matters. Center for Economic Policy Research Discussion Paper 1952. London.Google Scholar
  9. Geroski, P. (1991). 1992 and European Industrial Structure. In G. MacKenzie and A. J. Venables (eds.),The Economics of the Single European Act. London: Macmillan.Google Scholar
  10. Hanson, G. (1998). Market Potential, Increasing Returns, and Geographic Concentration. National Bureau of Economic Research Working Paper 6429. Cambridge, Mass.Google Scholar
  11. Harrigan, J. (1996). Openness to Trade in Manufactures in the OECD.Journal of International Economics 40 (1): 23–39.CrossRefGoogle Scholar
  12. Haveman, J., and D. Hummels (1997). What Can We Learn from Bilateral Trade? Gravity and Beyond. MimeoGoogle Scholar
  13. Head, K., and J. Ries (1999). Armington Vs. Krugman: A Test of Two Trade Models. International Business Trade and Finance Working Paper 99/02. University of British Columbia.Google Scholar
  14. Helliwell, J. (1996). Do National Borders Matter for Quebec’s Trade?Canadian Journal of Economics 29 (3): 507–522.CrossRefGoogle Scholar
  15. — (1997). National Borders, Trade and Migration.Pacific Economic Review 3 (3): 165–185.CrossRefGoogle Scholar
  16. Hillberry, R. (1998). Regional Trade and the ‘Medicine Line’: The Border Effect in US Commodity Flow Data.Journal of Borderland Studies 8 (2): 1–17.CrossRefGoogle Scholar
  17. Krugman, P. R. (1980). Scale Economies, Product Differentiation, and the Pattern of Trade.American Economic Review 70 (5): 950–959.Google Scholar
  18. Leamer, E. (1997). Access to Western Markets, and Eastern Effort Levels. In S. Zecchini (eds.),Lessons from the Economic Transition: Central and Eastern Europe in the 1990s. Dordrecht: Kluwer Academic Publishers.Google Scholar
  19. McCallum, J. (1995). National Borders Matter: Canada-US Regional Trade Patterns.American Economic Review 85 (3): 615–623.Google Scholar
  20. Neven, D. J., and L-H. Roeller (1991). European Integration and Trade Flows.European Economic Review 35 (6): 1295–1309.CrossRefGoogle Scholar
  21. Neven, D., G. Norman, and J-F. Thisse (1991). Attitudes Towards Foreign Products and International Price Competition.Canadian Journal of Economics 24 (1): 1–11.CrossRefGoogle Scholar
  22. Nitsch, V. (1997). National Borders and International Trade: Evidence from the European Union. Manuscript.Google Scholar
  23. Smith, A., and A. Venables (1988). Completing the Internal Market in the European Community.European Economic Review 32 (7): 1501–1525.CrossRefGoogle Scholar
  24. Wei, S.-J. (1996). Intra-National Versus International Trade: How Stubborn Are Nations in Global Integration? National Bureau of Economic Research Working Paper # 5531. Cambridge, Mass.Google Scholar
  25. Wolf, H. C. (1997). Patterns of Intra- and Inter-State Trade. National Bureau of Economic Research Working Paper #5939. Cambridge, Mass.Google Scholar

Copyright information

© Institut fur Weltwirtschaft an der Universitat Kiel 2000

Authors and Affiliations

  • Keith Head
  • Thierry Mayer

There are no affiliations available

Personalised recommendations