European Economic Integration


Kiel Institute for World Economics

Advanced Studies Program


February 2005


Marius Brülhart



The aim of this course is to equip students with a thorough, unbiased and critical understanding of the main economic issues that arise in the context of European integration. The course is designed for students with a solid background in economic theory and focuses mainly on microeconomic aspects. It combines lectures with student presentations of assigned readings.

Course structure

Topic 1:          Descriptive background

  1. Post-War economic integration in Western Europe
  2. The decision-making institutions of the EU
  3. The budget of the EU


Topic 2:          Product-market integration

  1. Regional integration in a neoclassical world
  2. Regional integration and increasing returns
  3. Empirical evidence


Topic 3:          Factor-market integration

  1. Factor mobility in a neoclassical world
  2. Factor mobility and increasing returns
  3. Tax competition
  4. Empirical evidence


Topic 4:          Economic analysis of EU economic policies

  1. Agriculture
  2. Regional policy
  3. Trade policy








Mo, 7/2/05


(intro + topic 1a)


(topic 1b)


Tu, 8/2/05


(topic 1c)


(topic 2a)


We, 9/2/05


(topic 2b)

Presentations I

1) Winters (1997), and Winters &

    Chang (2000)

2) Carrère (2005)

Presentations II

1) Goldberg & Verboven (2005)

2) Head & Mayer (2001)

Th, 10/2/05


(topic 3a)

Presentations III

1) Borjas (1995)

2) Grether, de Melo & Müller (2001)


Mo, 14/2/05


(topic 3b)

Presentations IV

1) Martin (1999)

2) Combes & Overman (2004)


(topic 3c)

Tu, 15/2/05


(topic 4a)

Presentations V

1) Griffith & Klemm (2004)

2) Boldrin & Canova (2001)


We, 16/2/05


(topics 4b and 4c)

Presentations VI

1) Oxfam (2004)

2) Konings & Vandenbussche (2005)




Some of the lecture slides can be downloaded:

A Chronology of European Integration   

The Allocation of Votes in the European Council, pre- and post-Nice

International duopoly

Monopolistic competition and the gains from trade through increasing product variety

A simple model of horizontal FDI

The "core-periphery" model

The standard model of capital tax competition


+ Richard Baldwin's PowerPoint slides

The course does not follow a unique textbook, but it draws on the following titles:


The following papers will be covered by student presentations:

·       Borjas G. (1995) "The Economic Benefits from Immigration" Journal of Economic Perspectives, vol. 9, pp. 3-22.

·       Boldrin, Michele and Canova, Fabio (2001) "Inequality and Convergence in Europe's Regions: Reconsidering European Regional Policies". Economic Policy, vol. 16, pp. 205-253

·       Carrère, C. (2005) "Revisiting the Effects of Regional Trade Agreements on Trade Flows with Proper Specification of the Gravity Model", European Economic Review, forthcoming.

·       Combes, P.-P. and Overman, H.G. (2004) "The Spatial Distribution of Economic Activities in the European Union". In: Henderson, J.V. and Thisse, J.-F. (eds.) Handbook of Regional and Urban Economics - Volume 4: Cities and Geography. Elsevier.

·       Goldberg, P.K. and Verboven, F. (2005) "Market Integration and Convergence to the Law of One Price: Evidence from the European Car Market", Journal of International Economics, vol. 65, p. 49-73.

·       Grether, JM.; de Melo, J. and Müller, T. (2001) "The Political Economy of International Migration in a Ricardo-Viner Model" CEPR Discussion Paper, No. 2714.

·       Griffith, R. and Klemm, A. (2004) "What Has Been the Tax Competition Experience of the Last 20 Years?" Working Paper, Institute for Fiscal Studies, London.

·       Head, K. and Mayer, T. (2000) "Non-Europe: The Magnitude and Causes of Market Fragmentation in the EU". Weltwirtschaftliches Archiv, vol. 136, pp. 285-314.

·       Konings, J. and Vandenbussche, H. (2005) "Antidumping Protection and Markups of Domestic Firms: Evidence from Firm-Level Data". Journal of International Economics, forthcoming.

·       Martin, R. (1999) "The New 'Geographical Turn' in Economics: Some Critical Reflections". Cambridge Journal of Economics, vol. 23, pp. 65-91.

·       Oxfam (2004) "Dumping on the World: How EU Sugar Policies Hurt Poor Countries" Oxfam Briefing Paper.

·       Winters, A. (1997) "Regionalism and the Rest of the World: The Irrelevance of the Kemp-Wan Theorem". Oxford Economic Papers, vol. 49, pp. 228-234.

·       Winters, A. and Chang, W. (2000) "Regional Integration and Import Prices: An Empirical Investigation". Journal of International Economics, vol. 51, pp. 363-377.


Some pointers to further background reading:


Topic 1

+      Williams, A.M. (1994) The European Community: The Contradictions of Integration, 2nd edition, Blackwell, 1994.

+      Baldwin, R. and Widgrén, M. (2004) Winners and Losers under Various Dual Majority Rules for the EU Council of Ministers, CEPR Discussion Papers, No. 4450.

+      Kauppi, H. and Widgrén, M. (2004) What Determines EU Decision Making? Needs, Power or Both?, Economic Policy, vol. 39, pp. 221-266.



Topic 2

+        Goldberg, P.K. and Verboven, F. (2001) "The Evolution of Price Dispersion in the European Car Market", Review of Economic Studies, vol. 68, p. 811-848.

+        Markusen, J.R.; Melvin, J.R.; Kaempfer, W.H. and Maskus K.E. (1995) International Trade: Theory and Evidence, McGraw-Hill.

+        Jacquemin, A. and Sapir, A. (1989) The European Internal Market: Trade and Competition, Oxford University Press.

+        Panagariya, A. (2000) "Preferential Trade Liberalisation: The Traditional Theory and New Developments". Journal of Economic Literature, vol. 36, pp. 287-331.

+        Robson, P. (1998) The Economics of International Integration, 4th edition, Routledge.

+        Winters, L.A. (1999) "Regionalism Vs. Multilateralism". In: Baldwin, R.E. et al. (eds.) Market Integration, Regionalism and the Global Economy. CEPR, London. 

+   references on empirics of trade and locaction



Topic 3

+        Brülhart, M. (1998) "Economic Geography, Industry Location and Trade: The Evidence". World Economy, vol. 21, pp. 775-801.

+        Brülhart, M. (2001) "Evolving Geographical Specialisation of European Manufacturing Industries". Weltwirtschaftliches Archiv, vol. 137, pp. 215-243.

+        Brülhart, M. (2004) "Sectoral Location, Core-Periphery Gradients, and European Integration". Mimeo, University of Lausanne.

+        Ciccone, A. (2002) "Agglomeration Effects in Europe". European Economic Review, Vol. 46, pp. 213-227.

+        Emerson, M. et al. (1988) The Economics of 1992, Oxford University Press.

+        Faini, R. (1999) "European Migrants: An Endangered Species?". In: Baldwin, R.E. et al. (eds.) Market Integration, Regionalism and the Global Economy. CEPR, London. 

+   Haufler, A. (2001) Taxation in a Global Economy, Cambridge University Press. (in particular chapters 2 and 4.3)

+        Jacquemin, A. and Sapir, A. (1989) The European Internal Market: Trade and Competition, Oxford University Press.

+   references on empirics of trade and locaction



Topic 4