Single European Market (SEM)

The single market was introduced with Maastricht Treaty in 1992; it removed the barriers to the movement of people, goods, capital and services.

 

There are a number of benefits of the single European market:

  • Firms are able to achieve greater economies of scale.

What will happen to a firm’s average costs if it is able to achieve greater economies of scale?

 

 

What is a possible impact upon consumers?

 

 

  • It is made cross border mergers and takeovers easier.
  • Firms will be forced to become more competitive as they are exposed to more competition.

How should this impact consumers?

 

 

  • An increase in foreign direct investment should take place by firms wanting to produce within the single European market.
  • Individuals have the right to work, study or retire in any of the member countries.
  • A decrease in red tape for businesses that wish to export to other countries in the single market.
  • It should reduce price differentials.

 

There are also a number of disadvantages of the single European market:

  • The increased competition may lead to some firms not being able to compete and there will be job losses.
  • Some markets have not been completely opened up, for example, gas and electricity supply.
  • Differences in taxation laws can still make trade with and working abroad somewhat complicated.
  • There are still significant differences in prices between countries in the single market.

 

 

 

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