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Non-Europe: The Magnitude and Causes of Market Fragmentation in the EU

Author

Listed:
  • Keith Head

    (University of British Columbia)

  • Thierry Mayer

    (TEAM - CESSEFI - Université Paris 1)

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

Suggested Citation

  • Keith Head & Thierry Mayer, 1999. "Non-Europe: The Magnitude and Causes of Market Fragmentation in the EU," Cahiers de la Maison des Sciences Economiques bla99004, Université Panthéon-Sorbonne (Paris 1).
  • Handle: RePEc:mse:wpsorb:bla99004
    DOI: 10.1007/BF02707689
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Borders; European Union; gravity; non-tariff barriers;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F15 - International Economics - - Trade - - - Economic Integration

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