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 ?
The two communities in Abyei, UNISFA stated, were also supported in setting up a joint market security mechanism and the aforementioned joint traditional court to maintain law and order in the common market.
Eventually, with the above-mentioned Decision of July 19, 2004, the Commission declared the proposed concentration compatible with the common market.
The Court therefore considers that Article 88, Paragraph 2 of the EC Treaty "must be interpreted as enabling the Commission to review, after 23 July 2002, the compatibility with the common market of state aid granted in the fields falling with the scope of the ECSC Treaty" as well as "the application by the member states of decisions authorising state aid adopted pursuant to the ECSC Treaty, in respect of situations existing prior to the expiry of that treaty".
The common market has no common agricultural policy.
Once we joined the common market inflation in this country took off and interest rates ended up around 16%.
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.
When I voted back in 1975 for the Common Market (EEC) I agreed with free trade between member states.
Market ignorance POLITICIANS are for ever playing on the ignorance, prejudices and emotions of the electorate, particularly in respect of the Common Market.
I WAS too young to vote in the last referendum we had about staying in the Common Market which took place in 1975.
The meeting agreed on a preliminary study highlighting different projects to support the common market, in addition to creating a media plan and holding workshops to increase awareness among the public and the government, private and education sectors on its benefits and importance.
He considered the common market one of the major achievements of the six-country Gulf bloc.
We have a choice in the European elections between those parties who want the common market to be left to unregulated market forces (notably the Conservatives and Liberal Democrats) and those who believe that a common market needs common rules to protect consumers, to protect the weak and vulnerable and to set high environmental standards (Labour and the Greens).