common market
n.
An economic unit, typically formed of nations, intended to eliminate or markedly reduce trade barriers among its members.
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An economic unit, typically formed of nations, intended to eliminate or markedly reduce trade barriers among its members.
An economic arrangement between the Western European nations that facilitates trade by lowering regulatory and tariff barriers. It is also called the European Economic Community (EEC).
An economic association of states into a single trading market having little or no restriction of movement of individuals, capital, goods, and services within it and with a united trading policy towards non-member states. The EEC was an example.
When the integration of a group of national economies is taken beyond the stage of a customs union by the adoption of common economic policies and the facilitation of free movement of capital and labour, a common market results. The most accomplished example is the European Union.
— Charles Jones
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Trade Series
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| International trade |
| History of international trade
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| Free trade |
| Protectionism |
| Trade pact |
| Trade bloc |
| Free trade area |
| Customs union |
| Monetary union |
| Common market |
| Economic and monetary union |
A Common Market is a customs union with common policies on product regulation,
and freedom of movement of all the three factors of production (land, capital and
Sometimes a Single Market is differentiated as a more advanced form of common market. In comparison to common a single market envisions more efforts geared towards removing the physical (borders), technical (standards) and fiscal (taxes) barriers among the member states. These barriers obstruct the freedom of movement of the four factors of production. To remove these barriers the member states need political will and they have to formulate common economic policies.
This is the fourth stage of economic integration.
A single market has many benefits. The central benefit is the increase of division of labour and the consequent increase in productivity. Other important benefit is, with full freedom of movement for all the factors of production between the member countries, that the factors of production also become more efficiently allocated, further increasing productivity.
For both business within the market and consumers, a single market is a very competitive environment, turning the existence of monopolies more difficult. This means that inefficient companies will suffer a loss of market share and may have to close down. However, efficient firms can benefit from economies of scale, increased competitiveness and lower costs, as well as expect profitability to be a result. Consumers are benefited by the single market in the sense that the competitive environment brings them cheaper products, more efficient providers of products and also increased choice of products. What is more, businesses in competition will innovate to create new products; another benefit for consumers.
Transition to a single market can have short term negative impact on some sectors of a national economy due to increased international competition. Enterprises that previously enjoyed national market protection and national subsidy (and could therefore continue in business despite falling short of international performance benchmarks) may struggle to survive against their more efficient peers, even for its traditional markets. Ultimately, if the enterprise fails to improve its organisation and methods, it will fail. The consequence is unemployment.
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