common market

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Related to the Common Market: 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

see TRADE INTEGRATION.

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;
  4. INVESTMENT and ECONOMIC GROWTH.

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 ?
"On 10 August, UNISFA facilitated a follow up meeting of the joint peace committee at Amiet to work out the modalities, resulting in a written agreement to formally reopen the common market there on 15 August," further noted the statement, adding that "Humanitarian partners, and UNISFA, supported the common market with water and sanitation facilities".
Undoubtedly, the common market offers broad areas for promoting economic integration for the benefit of nationals and businesses in the grouping.
"The common market would play an important role in helping GCC achieving food, water, electricity sufficiency and bolstering external and social security." He noted that the GCC has made great strides in the relentless efforts to create the common market and support pan-GCC economic relations.
As a result I joined the League against the Common Market.
"The GCC states are all sovereign and it is up to the leadership in each state to decide when and how it implements the agreements on the common market, but I have no doubt that the leadership of every country is committed to moving forward with this."
The decision to launch the common market was taken by the group's leaders at their last summit, which was held in Doha on Dec.
In July 2002, the European Commission decided that the state aid granted by the Spanish government to Gonzalez y Diez intended to cover the exceptional restructuring costs for 1998, 2000 and 2001 were incompatible with the common market.
The Common Market Law Review, of which McDonnell is an associate editor, debuted in 1963 as the first specialized review to dedicated to examination of common European law.
This same strategy of deception was also employed decades earlier to get the unsuspecting peoples of Europe to accept the Common Market and (much more recently) the European Union.
The Commission says it "doubts that such measures may be considered compatible with competition rules, as they would seem to interfere with the good functioning of the common market for fruit and vegetables".
Dear Editor, - It is claimed that Britain working with the new members of the Common Market can reduce its cumbersome bureaucracy.