common market

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Related to common market: Free trade area, Economic union, European Common Market

Common market

An agreement between two or more countries that permits the free movement of capital and labor as well as goods and services.

Common Market

1. A market with the free movement of goods, services, labor, and capital between two or more places. For example, even though Texas and Oklahoma are different places with different governments and regulations, the two have a common market because workers do not need permission to move between them, and one may transfer money between them without incurring any tariffs or fees. See also: Free trade.

2. An informal term for the European Economic Community.

Common Market

common market


common market

a form of TRADE INTEGRATION between a number of countries in which members eliminate all trade barriers (TARIFFS, etc.) amongst themselves on goods and services and establish a uniform set of barriers against trade with the rest of the world, in particular, a common external tariff (see CUSTOMS UNION). In addition, a common market provides for the free movement of labour and capital across national boundaries. The aim of a common market is to secure the benefits of international SPECIALIZATION, thereby improving members’ real living standards.

The short- and medium-term impact of the formation of a common market is mainly felt through an increase in trade between member countries. TRADE CREATION is typically associated with a reallocation of resources within the market favouring least-cost supply locations and a reduction in prices resulting from the elimination of tariffs and lower production costs. (See GAINS FROM TRADE.)

In addition, a common market can be expected to promote longer-term (dynamic) changes conducive to economic efficiency through:

  1. COMPETITION. The removal of tariffs, etc., can be expected to widen the area of effective competition; high-cost producers are eliminated, while efficient and progressive suppliers are able to exploit new market opportunities;
  2. ECONOMIES OF SCALE. A larger ‘home’ market enables firms to take advantage of economies of large-scale production and distribution, thereby lowering supply costs and enhancing COMPARATIVE ADVANTAGE;
  3. TECHNOLOGICAL PROGRESSIVENESS. Wider market opportunities and exposure to greater competition can be expected to encourage firms to invest and innovate new techniques and products;

Finally, the virtuous circle of rising income per head, growing trade, increased productive efficiency and investment may be expected to combine to produce higher growth rates and real standards of living.

The EUROPEAN UNION is one example of a common market. See ANDEAN PACT.

References in periodicals archive ?
Europe has to change get rid of the plutocrats in Brussels and revert to the origins of The Common Market.
When it came to the 1970s referendum to join the Common Market I tried to get all my friends to vote 'No' because I believed we would benefit less than the other members.
Al-Ebrahim told Bahrain News Agency (BNA) that the creation of the Gulf Energy Exchange Common Market is considered a strategic choice for the GCC countries, pointing out that the new challenge for the Authority was ushering into the phase of activation of energy trade and the creation of the common electric power market which will provide GCC-member countries with optimal choices of harnessing various energy sources.
Speaking on the sidelines of the seminar of Islamic Corporation for the Insurance of Investment and Export Credit in Amman, Jordan, Nematzadeh said that the establishment of such common markets, despite the oppositions and difficulties, would boost trade among Islamic countries, Fars news agency reported on Wednesday.
European countries established the EU after the Second World War; on the onset, it was a difficult enterprise; it is however possible for Islamic countries, provided that they show strong resolution in working out the common market," he emphasized.
BEIRUT: A trade agreement between Lebanon and Mercosur, also known as the common market of South America, is to be signed next month in Argentina, Ambassador Ricardo Larriera said Monday.
The Islamic Republic has been publicly pushing the common market idea for decades.
Unified drug registration, pricing, and procurement policies among the member states are steadily moulding the GCC region into a harmonised common market, as opposed to the individual markets of the past," said analyst Gilan Megeed.
1 (SUNA) - A Delegation of the National Elections Commission was briefed on the Zambian expirement on the updating of the voting register and exchanged views with their Zambian counterparts when they visited the headquarters of the Common Market for Eastern and Southern Africa (COMESA).
Despite the three years existence of the East African Community (EAC) common market, many smallholder farmers and ordinary citizens are not aware of its existence and so have been unable to exploit it.
The UK used to get 40% of all overseas investment into Europe before the European Common Market came into being in 1958.
When the last referendum was held in 1975, the issue was access and jobs in a common market, with pro and anti-marketeers emerging from all mainstream parties.

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