Economic Integration Effects on Market Structure

Following a suggestion in Krugman (1979), the paper introduces a novel functional form (a sum of negative exponential utilities) to model consumer preferences in order to analyse the welfare effects of the European economic Integration. Both the cases of an oligopoly and of a Monopolistic Competition market (à la Dixit-Stiglitz, 1977) are considered, reaching similar conclusion (economic integration raises welfare and consumer surplus). The impact of economic integration on the possible degree of collusion among firms is also sketched.