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The removal of internal market barriers and the harmonisation of national regulations are expected to lead to an increase in trade and reductions in cost.
David Ricardo stated in his theory of Comparative Advantage that countries would not be able to fully exploit all the advantages from trade unless there is the removal of all barriers to trade. Integration leads to the exploitation of gains from comparative advantage with firms specialising, leading to efficiency gains and exchanging products within an enlarged market. The enlarged market also means a greater competition between firms, which again ought to foster an increase in efficiency, particularly Allocative efficiency (prices reflecting the economic marginal costs of supply)...
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