The Performance of the Single Market for Goods after 25 Years

Abstract

This report quantifies the trade effects of the European integration, but also highlights potentials from further integration in goods markets by addressing existing weaknesses in the implementation and enforcement of the Single Market rules in terms of goods trade, competition as well as productivity and ultimately welfare at the disaggregated level of individual industries and countries. The analysis follows the tradition of earlier studies with a focus on mechanisms and expected benefits of increased trade predicted by traditional (trade) theory (pro-competitive effects of market opening and efficiency gains through economies of scale and increased specialisation according to comparative advantages), but also provides an analysis of – so far less obvious – potential benefits stemming from improvements of institutional quality and its impact on comparative advantage and export specialisation and as a determinant of intra-EU production linkages via (intra-firm) vertical integration or cross-border outsourcing of inputs.