Estimating economic benefits of the Single Market for European countries and regions

This study provides insights into the economic benefits of the European Single Market (SM) for countries and regions across Europe. Specifically, we evaluate the impact of the trade boosting effects of the SM on productivity, markups, product variety, welfare and the distribution of population across European countries and regions. We employ a model characterized by costly trade, love of variety, heterogeneous firms, labour mobility as well as endogenous markups and productivity. The findings suggest that on average, all EU citizens gain substantially from the SM. Yet, we uncover a strong heterogeneity of gains across European countries and regions.