The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

European Union Single Market: Economic Impact

  • Jacques Pelkmans
Reference work entry


This compact literature survey covers the economic impact of the old EEC customs union and, more extensively, of the Single Market as it has emerged since the mid-1980s. The emphasis is on micro-economic studies of the effects on trade in goods (initially trade creation and diversion) and degrees of market integration measured in various ways, such as ‘home bias’. Aspects discussed also include trends of price convergence, effects on competition, and induced impact on static and dynamic efficiency (e.g. innovation) as well as variety and higher productivity at the firm level. Economic research on the internal market in services has barely begun in earnest. A very brief discussion of methods highlights some of the problems. Finally, the principal work on macro-economic effects is summarised; that is, on overall productivity, economic growth or one-off effects of specific internal market initiatives.


Economic integration European integration Internal market Single market 

JEL Classifications

This is a preview of subscription content, log in to check access.


  1. Allen, C., M. Gasiorek, and A. Smith. 1998. The competition effects of the Single Market in Europe. Economic Policy, no. 27, October.Google Scholar
  2. Anderson, J., and E. van Wincoop. 2003. Gravity with gravitas: A solution to the border puzzle. American Economic Review 93: 170–192.CrossRefGoogle Scholar
  3. Baldwin, R. 1989. The growth effects of EC1992. Economic Policy, no. 9.Google Scholar
  4. Baldwin, R., and A. Venables. 1995. Regional economic integration. In Handbook of international economics, ed. G. Grossman and K. Rogoff, vol. 3. Amsterdam/New York: Elsevier.Google Scholar
  5. Baldwin, R., J. Francois, and R. Portes. 1997. The costs and benefits of enlargement: the impact on the EU and Central Europe. Economic Policy, no. 24, October.Google Scholar
  6. Bottasso, A., and A. Sembenelli. 2001. Market power, productivity and the EU Single Market program: Evidence from a panel of Italian firms. European Economic Review 45: 167–186.CrossRefGoogle Scholar
  7. Breuss, F. 2002. Benefits and dangers of EU enlargement. Empirica 29(3): 245–274.CrossRefGoogle Scholar
  8. Breuss, F. 2009. An evaluation of the EU’s fifth enlargement with special focus on Bulgaria and Romania, European Economy – Economic Papers 361, European Commission.Google Scholar
  9. Chen, N. 2004. Intra-national vs. international trade in the EU: Why do national borders matter? Journal of International Economics 63(1): 93–11.CrossRefGoogle Scholar
  10. Combes, P., M. Lafourcade, and T. Mayer. 2005. The trade-creating effects of business and social networks: Evidence from France. Journal of International Economics 66(1): 1–29.CrossRefGoogle Scholar
  11. De Bruijn, R., H. Kox, and A. Lejour. 2008. Economic benefits of an integrated European market for services. Journal of Policy Modeling 30(2): 301–319.CrossRefGoogle Scholar
  12. Delgado, J. 2006. Single Market trails home bias. Bruegel Policy Brief 2006/05.
  13. Egger, P., and M. Larch. 2011. An assessment of the Europe Agreements’ effects on bilateral trade, GDP and welfare. European Economic Review 55(2): 263–279.CrossRefGoogle Scholar
  14. Emerson, M., et al. 1988. The economics of 1992. European Economy, no. 35, April.Google Scholar
  15. Engel, Ch., and J. Rogers. 2004. European product market integration after the euro. Economic Policy, July, no. 19.Google Scholar
  16. European Commission. 1988. Research on the costs of non-Europe (20 volumes). Luxembourg: EC Publications Office, Documents Series.Google Scholar
  17. European Commission. 1996. Economic valuation of the internal market. European Economy, Reports and studies, no. 4, December.Google Scholar
  18. European Commission. 1997. Single Market review (38 volumes). Luxembourg/London: Office of Official Publications of the EC/Kogan Page.Google Scholar
  19. Gasiorek, M., A. Smith, and A. Venables. 1992. Trade and welfare: A general equilibrium model. In Trade flows and trade policy after ‘1992’, ed. L. Winters. Cambridge: Cambridge University Press.Google Scholar
  20. Gasiorek, M., A. Smith, and A. Venables. 2002. The accession of the UK to the EC: A welfare analysis. Journal of Common Market Studies 40(3): 425–447.CrossRefGoogle Scholar
  21. Geroski, P. 1989. The choice between diversity and scale. In 1992 – Myths and Realities, ed. E. Davis et al. London: Centre for Business Strategy, London Business School.Google Scholar
  22. Goldberg, P., and F. Verboven. 2005. Market integration and convergence to the Law of One Price: Evidence from the European car market. Journal of International Economics 65: 49–73.CrossRefGoogle Scholar
  23. Griffith, R., R. Harrison, and H. Simpson. 2006. Product market reform and innovation in the EU. CEPR discussion paper, no. 5849, September.Google Scholar
  24. Guellec, D., and B. van Pottelsberghe. 2007. The economics of the European patent system. Oxford: Oxford University Press.CrossRefGoogle Scholar
  25. Halkos, G., and N. Tzeremes. 2009. Economic efficiency and growth in EU enlargement. Journal of Policy Modelling 31: 847–862.CrossRefGoogle Scholar
  26. Harrison, G., T. Rutherford, and D. Tarr. 1996. Increased competition and completion of the market in the EU. Journal of Economic Integration 11(3): 332–365.CrossRefGoogle Scholar
  27. Harrison, G., T. Rutherford, and I. Wooton. 1993. An alternative welfare decomposition for customs unions. Canadian Journal of Economics 26(4): 961–968.CrossRefGoogle Scholar
  28. Head, R., and T. Mayer. 2000. Non-Europe: The magnitude and causes of market fragmentation in the EU. Weltwirtschaftliches Archiv 126: 2.Google Scholar
  29. Henrekson, M., J. Torstensson, and R. Torstensson. 1997. Growth effects of European integration. European Economic Review 41(8): 1537–1557.CrossRefGoogle Scholar
  30. Hill, R. 2004. Constructing price indexes across space and time: The case of the European Union. American Economic Review 94(5): 1379–1410.CrossRefGoogle Scholar
  31. Hocking, R. 1980. Trade in motorcars between the major European producers. Economic Journal 90: 1. (September).Google Scholar
  32. Hoffmann, A. 2000. The gains from partial completion of the Single Market. Weltwirtschaftliches Archiv 136(4): 601–629.CrossRefGoogle Scholar
  33. Ilzkovitz, F. et al. 2007. Steps towards a deeper economic integration: The internal market in the twenty first century. Economic Papers no. 271, January. European Commission, Brussels.Google Scholar
  34. Johnson, H. 1958. The gains from freer trade in Europe, an estimate. Manchester School, 26.Google Scholar
  35. Magee, C. 2008. New measures of trade creation and trade diversion. Journal of International Economics 75(2): 349–362.CrossRefGoogle Scholar
  36. Mayes, D. 1978. The effects of economic integration on trade. Journal of Common Market Studies XVII: 1.CrossRefGoogle Scholar
  37. Miller, M.H., and J.E. Spencer. 1977. The static economic effects of the UK joining the EEC: A general equilibrium approach. Review of Economic Studies 44(136): 71.CrossRefGoogle Scholar
  38. Mohler, L., and M. Seitz. 2010. The gains from variety in the EU. Muenchen discussion paper, no. 2010-24, March.Google Scholar
  39. Mueller, J. 1981. Competitive performance and trade within the EEC: Generalisations from several case studies with specific reference to the West German economy. Zeitschrift fuer die gesamte Staatswissenschaft 137: 3.Google Scholar
  40. Nitsch, V. 2000. National borders and international trade: Evidence from the EU. Canadian Journal of Economics 33: 1091–1105.CrossRefGoogle Scholar
  41. Notaro, G. 2011. European integration and productivity: Exploring the early effects of completing the internal market. Journal of Common Market Studies 49: 845–869.CrossRefGoogle Scholar
  42. Pacchioli, C. 2011. Is the EU internal market suffering from an integration deficit? CEPS Working Document, no. 348, May. CEPS, Brussels.
  43. Panagariya, A. 2000. Preferential trade liberalization: The traditional theory and new developments. Journal of Economic literature 38(2): 287–331.CrossRefGoogle Scholar
  44. Pelkmans, J. 2011. European Union Single Market: Design and development. In The New Palgrave dictionary of economics, forthcoming.Google Scholar
  45. Pelkmans, J., and A. Renda. 2011. Single eComms market? No such thing…. Communications & Strategies 82: 21–42.Google Scholar
  46. Petith, H.C. 1977. European integration and the terms of trade. Economic Journal 87: 262–272.CrossRefGoogle Scholar
  47. Prewo, W. 1974. Integration effects in the EEC: An attempt at quantification in a general equilibrium framework. European Economic Review 3.Google Scholar
  48. Scaperlanda, A. 1967. The EEC and US foreign investment: Some empirical evidence. Economic Journal 77: 22–26.CrossRefGoogle Scholar
  49. Schmidt, K.M. 1997. Managerial incentives and product market competition. Review of Economic Studies 64(2): 191–213.CrossRefGoogle Scholar
  50. Scitovsky, T. 1958. Economic theory and Western European integration. London: Allen & Unwin.Google Scholar
  51. Sorensen, P.B. 1998. Discussion. Economic Policy, no. 27, October.Google Scholar
  52. Straathof, B., G.J. Linders, A. Lejour, and J. Moehlmann. 2008. The internal market and the Dutch economy – implications for trade and economic growth. CPB Document no. 168, September.
  53. Surinach, J., F. Manca, and R. Moreno. 2011. Extension of the study on the diffusion of innovation in the internal market, European Commission, DG Ecfin. Economic Papers no. 438, February.Google Scholar
  54. Verdoorn, P., and A. Schwartz. 1972. Two alternative estimates of the effects of EEC and EFTA on the pattern of trade. European Economic Review 3(3): 291–335.CrossRefGoogle Scholar
  55. Viaene, J.M. 1982. A customs union between Spain and the EEC: An attempt at quantification of the long-term effects in a general equilibrium framework. European Economic Review 18(2): 345–368.CrossRefGoogle Scholar
  56. Vives, X. 2008. Innovation and competitive pressure. Journal of Industrial Economics 61(3): 419–469.CrossRefGoogle Scholar
  57. Winters, L.A. 1987. Britain in Europe: A survey of quantitative trade studies. Journal of Common Market Studies 25: 315–335.CrossRefGoogle Scholar

Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Jacques Pelkmans
    • 1
  1. 1.