ABSTRACT
The centrepiece of most integration schemes is the integration of goods markets. This chapter describes a theoretical way how markets evolve when barriers to movement are torn down. It discusses the way in which the European Union (EU) has realised the integration of the markets for manufactured goods of its member countries. The chapter outlines some basic theoretical concepts and presents the advantages of integration, the barriers to trade and the reasons for protection. It provides a close analysis of the changes in the geographical as well as the product structure of the internal and external trade of the EU under the influence of integration. The chapter offers the price aspect, finding out whether or not prices have converged under the pressure of integration. It explores how liberalised goods movements in Europe have affected welfare and economic growth. Many countries have protected their domestic producers from foreign competition by introducing obstacles to free trade.
