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

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  • Keith Head
  • Thierry Mayer

Abstract

In 1985 the European Commission diagnosed its member states as suffering from excessive market fragmentation, a state of affairs it later referred to as "Non-Europe". In response, the European Union launched an ambitious program to unify its internal market by removing non-tariff barriers. We examine the empirical basis for the Commission's diagnosis using a trade model derived from monopolistic competition. We then investigate the links between the initial size and subsequent evolution of border effects within the European Union. Our findings support the view that European consumers act as if imports from other members were subject to high non-tariff barriers. However, there appears to be almost no relation between market fragmentation and the barriers that were identified and removed by Europe's Single Market Programme.

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Bibliographic Info

Article provided by Springer in its journal Weltwirtschaftliches Archiv.

Volume (Year): 136 (2000)
Issue (Month): 2 (June)
Pages: 284-314

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Handle: RePEc:spr:weltar:v:136:y:2000:i:2:p:284-314

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Keywords: F12; F15;

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  1. Bergstrand, Jeffrey H, 1985. "The Gravity Equation in International Trade: Some Microeconomic Foundations and Empirical Evidence," The Review of Economics and Statistics, MIT Press, vol. 67(3), pages 474-81, August.
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  11. Jonathan Eaton & Samuel Kortum, 1997. "Technology and Bilateral Trade," Boston University - Institute for Economic Development 79, Boston University, Institute for Economic Development.
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