The Concepts of Similarity and Indirect Protection under EEC Treaty Article 95: the Alcohol Cases
One of the purposes of the Common Market is to create a single economic unit in which the sector that produces a particular good most efficiently will do so while driving out less efficient industries. This maximizes the use of scarce monetary, raw material, and labor resources. For example, assuming that there are no trade barriers, if the Italians can produce grapes more cheaply than the Germans, they will do so and export the grapes to Germany. Conversely, Germany may be able to export cars if it can produce them more efficiently and cheaply than the other Common Market states. The static effects of interaction occur when this free movement of goods alters supply and demand patterns to maximize the welfare of the consumer. The second purpose is to create a larger market in which economies of scale and mobility of the factors of production exist. These economic effects are referred to as the dynamic effects of integration.
Steven R. Swanson,
The Concepts of Similarity and Indirect Protection under EEC Treaty Article 95: the Alcohol Cases,
15 Vanderbilt Law Review
Available at: https://scholarship.law.vanderbilt.edu/vjtl/vol15/iss2/2