Economic Aspects of European Integration

Economic Aspects of European Integration

1. Political Dimension

   • Federal-/ Confederal-/ Nation-States
     • centralization vs decentralization unity/identity vs diversity
   • Institutions of the EU
     • Parliament, Council, Commission, Court
   • Redistribution Concerns
   • Identity & Nation building
   • Pillar appraoch (Pre-Lisbon)

2. Liberalization and the Internal Market

   • Market Integration
     • Segmented Markets -> Regionalism -> Globalization
       • Five Fredooms approach
       • reducing internal and external distances/barriers
       • competetive and comparative advantage
       • Impact on consumers
   • Establishing Competition
     • pro-competetive effect
       • consolidation/ M&A´s
       • economies of scale
       • market size

3. EU-Competition Policy

   • Objective: Maintaining competition
     • Legal setting: Art. 101, 102, 107-109
   • Relevant Cases: Google state aid, Truck cartel MAN, M&A Ryanair + AER Lingus, M&A GE + Honeywell
   • Central keywords: relevant market, abuse of dominant position, distortion of competition, efficiency defense, national champions

4. Global Trade & Investment Relations

   • Multilateralism Regionalism Strategic Globalization Protection
   • Merkel Beer Speech
   • Davos Speech
   • Trade & Integration Agreements
   • Optimum Currency Areas
     • Costs: lost autonomy, asymmetric shocks,
     • Benefits: lower TAC, exchange rate risk & more transparency, competition and trade
     • OCA Theory
       • Criteria for well-functioning: Economic Convergence, Adjustment Mechanisms to asymmetric shocks, joint policies and a common project
         • Coalition of the Able, Willing, Unwilling
     • Objective: Price Stability

5. Location & Cohesion Policy

   • Krugman Hypothesis
     • Mobility of labor/companies
     • Comparative Advantage approach
     • Regional Agglomeration Approach
     • Metropolitan Hub Approach
   • Equality vs Efficiency tradeoffs
   • Creation of Funds since 1958, esp. bail-outs in banking sector since 2007