ABSTRACT
The basic microeconomic theory of international economic integration consists of the static theory of customs unions and free trade areas, a central assumption of which is that factors of production are immobile both amongst the member countries and vis-à-vis the rest of the world. A common market, by contrast, involves not only the integration of product markets through the trade liberalization that results from customs union, but also the integration of factor markets through the elimination of obstacles to the free movement of factors within the bloc. The concept of a common market was probably introduced by the Spaak report of 1956, but in any case the term was in widespread use from the mid 1950s. The Treaty of Rome itself prescribed the establishment of a common market within twelve years, which would entail ‘the abolition, as between member states, of obstacles to freedom of movement for persons, services and capital’.
