Overall single market benefits

• Author: Petropoulos, Georgios; Marcus, J. Scott; Yeung, Timothy
• Pages: 30-38

IPOL | Policy Department for Economic, Scientific and Quality of Life Policies

30PE 631.044

3. OVERALL SINGLE MARKET BENEFITS

In Secti ons 3.1and 3.2of this chapter, respectively, we consider a range of current and previous

studies that assessed either ex ante or ex postthe be nefits of strengthening the European Single

Market. The assessments in these se ctions do not limi t themselves to digital aspects. W e th en c lo se

with a review in Section3.3of assessments of benefits specific to the Digital Single Market.

The EU’s Single Market is characterised by the so-called Four Freedoms: freedom of movement of

goods, services, capital, and individuals. For this study, our primary concern is with measures to

prom ote the free fl ow of goods and s ervi ces.

KEY FINDINGS

Numerous estimates of the gains produced by the Single Market have been made over the y ear s,

using a r ange of metho dologies and assump tions, and arri ving at a range of conc lusions.

We concur with the key findings of the comprehensive literature survey provided by Dahlberg

(2015), which was bas ed on most of the sam e studi es t hat app ear i n Sect ions 3 .1 and 3.2 of thi s i n -

dept h analysi s:

•“The single market has been a significant enabler for economic growth in Europe.

Comparisons are not easily done, but 2-4 per cent seems to be inthe ballpark.”

•“This effect primarily seems to have run throughthe free movement of goodsand

capital–the intra-EU trade and investment flows have experiencedsignificant

increases since theimplementation of the single market.”

•“The single marketdoes not seem to have affected the flows of services and people to

asignificant extent.”

•We have not identified anydefinitive ex post findings on the impact of free

movement ofservices.

•Single Market gainsdue to free movement of services appearto have been limited

anduneven, and there are some indications that price mark-ups in the services sector

haveactually increased. Given that services represent some 70% of European

GDP andemployment, this is worrisome.

Dahlberg’s estimate of gains of 2-4% of GDP implies that the Single Market currently generates

between €340 and €680 billion per year in benefits for the EU.

If it wer e as easy to p urchase goods cross-bor der as dome sti cally, pr ice converge nce would le ad to

prices that are lower by 1.0% for goods purchased online and 0.5% for good purchase offline.

Consumer and producer surplus would increase by 1.2% and 1.4% each. The DSM Strategy as

enacted to date realis es only a fraction of this gain. We estim ate that some € 36 bi llion per ye a r in

additional consumer gains alone remain to be realised.

Beyond this, broadband deployment and adoption clearly contribute to societal welfare.