Models of Market integration

Host country model

• Rules of the country where economic activity occurs apply.

• The norm for international trade

• non - discrimination rules in place for foreign products

• Each member state can retain its own rules as long as these rules do not discriminate against foreign products

Host country model implications

Soverignty - Limited constraints on MS power to decide the applicable rules within their territories + non-discrimination 

Institutions - national legislatures + national courts

Welfare - Non-economic values can be protected compatibly with non-discrimination

Room to accommodate different preferences 

democracy - Inclusive within each MS

Under-inclusive with regard to affected interest beyond the state

Dont take into the interest of all of those affected

Harmonization model

Unitary rules adopted at the EU level that apply uniformly to all member states. Norm for federal states

Harmonization model implications

Sovereignty -

vertical transfer of power MS —> EU

join the exercise of sovereign powers

MS represented in the Council and EUcon

Institutions

• EU legislature

Welfare

• economics of scale

Economic union

A type of integration involving cohesion in economic policies and a shared currency.

Positive integration

Integration through harmonization to create common rules.

Negative integration

Integration by removing barriers and restrictions in the market.

Total harmonization

Exhaustive regulation at the EU level that pre-empts member state activity.

Partial/minimum harmonization

Setting minimum standards while allowing member states to enact higher standards.

Art. 114 TFEU

Legislation that allows the harmonization of laws to ensure the functioning of the internal market.

Cartels

A group of independent companies that join together to fix prices, limit production, or engage in other anti-competitive practices.

Competitive market

A market structure characterized by many firms competing against each other.

Vertical transfer of power

The process of shifting authority from member states to a higher governing body, like the EU.

Democratic deficit

A situation where democratic institutions or processes do not effectively represent the interests of citizens.

Economic actors

Individuals or entities that engage in economic activities, such as businesses or consumers.

Regulatory competition

Competition among jurisdictions to create favorable regulations for economic actors.

Art. 36 TFEU

An article allowing member states to maintain certain restrictions to protect their interests.

Promotion of welfare

Integration efforts that consider both economic and non-economic values in policymaking.

Free movement of goods

The unrestricted movement of products across EU member states without tariffs or barriers.