M-Lec 1: G1 - Market Integration

Market Integration

The process of interconnection among different markets for giods, services, or factors of production.

19th Century

A period where market integration becomes a reality thanks to the advanced development of technology.

1913

The year the Market Integration first peaked.

Transportation and Infrastructure

A market integration factor where good roads, ports, and logistics make it easier to move goods between markets.

Communication Technology

A market integration factor where fast access to market information helps link different markets.

Trade Policies

A market integration factor where free trade agreements, reduced tarrifs, and open markets encourage integration.

Consumer Demand

A market integration factor where similar preferences and needs across regions push companies to integrate markets.

Ownership Integration

A degree of market integration where markets are so fully integrated that prices for the same good is identical across locations.

Contract Integration

A degree of market integration where markets are linked but price differences persist due to certain factors.

Horizontal Market Integration

A type of market integration where a company expands through acquisition or merging with other companies in the same industry and at the same stage of the supply chain.

Mergers

A form of horizontal integration where 2 companies are combined into a single, new company.

Acquisitions

A form of horizontal integration where one company buys out another company in the same industry.

Internal Expansions

A form of market integration where a company creates new branches or subsidiaries in different locations to offer similar products.

Vertical Integration

A type of market integration where a company owns or controls multiple stages of its supply chain.

Backward

A type of vertical integration where a company acquires suppliers.

Forward

A type of vertical integration where a company acquires distribrutors or retailers.

Balanced

A type of vertical integration where a company acquires both the supplier and the distribrutor or retailer.

Conglomorate

A type of market integration where a company acquires or merges with other businesses operating in different, unrelated industries.

Free Trade Area

A level of economic integration where countries removed tarrifs and quotas on goods traded between members while maintains independed trade rules to non-members.

ASEAN Free Trade Area

A free trade within the ASEAN countries. Essentially removing tarrifs and other restrictions in ASEAN member states.

Customs Union

A level of economic integration where 2 or more countries are agreed to reduce or remove certain policies, allowing fairness and reduces trade diversion. However, trade policies are still applied to non-members.

European Unions Customs Union

A Costoms Union in Europe where it eliminated customs duties and internal border checks for goods traded among its member states.

Common Market

A level of economic integration where it not just goes beyond goods and services, it allows free movement of labior, capital and enterprises across borders.

European Single Market

Established in 1993, cornerstone of the EU that allows the free movement of goods, services, people, and capital across its member states and some non-EU countries like Iceland, Norway, and Liechtenstein.

Economic Union

A level of economic integration where it involves sharing economic and monetary policies, often a common currency.

Eurozone

A zone in Europe where member countries use the currency, euro, and coordinate economic governance.

Physical Infrastructure

Part of infrastructure in Integration where it involves ports, airpots, roads, and railways which enables smooth trade and logistics.

Pan-Asian Highway Network

A cooperative physical infrastructure between countries in Asia and the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) to create a system of international highways across the continent.

Digital Infrastructure

Part of infrastructure in integration where high-speed internet, digital payment systems, and e-commerce platforms link global markets in real-time.

Lazada and Shopee

A example of Digital Infrastructure. These are e-commerce platforms connecting and trading to various stores wordwide to Southeast Asia.

Financial Infrastructure

Part of infrastructure in integration where international banking systems, capital markets, and fintech services allow quick and secure capital flow.

Law of One Price

A economic theory stating that identical goods sold in different locations should have the same price when expressed in a common currency, assuming no trade frictions.