If the Eurozone is meant to be a single market economy...

hatrickpatrick

...Why is it that inflation, wages, prices, etc are still different across the board?

I mean you have a lot of talk at the moment about multinationals pulling out of Western Europe and moving to the newer Eastern EU states where it's cheaper, but is the whole concept of "The Eurozone" not supposed to be that it resembles one economy?

(NOTE: No Lisbon stuff in here please! )

amacachi

Why are they different between London and Leeds, or Dublin and Mayo? Same logic really.

schween

I'm sure you'll find there's been a big difference in inflation between Dublin and let's say Leitrim during the boom. As previous poster said, same logic.

MrMatisse

Its due to the base costs in each country varying.

Ideally in a free market with perfect movement these these things would not happen as services etc could move freely and some of this would be eliminated. The eu parliament blocked the services directive which would have allowed this.

In addition tax rates vary in each country too and some countries have a greater supply of free labour than others thus wages vary.

Scofflaw

hatrickpatrick wrote: »

...Why is it that inflation, wages, prices, etc are still different across the board?

I mean you have a lot of talk at the moment about multinationals pulling out of Western Europe and moving to the newer Eastern EU states where it's cheaper, but is the whole concept of "The Eurozone" not supposed to be that it resembles one economy?

(NOTE: No Lisbon stuff in here please! )

Because it's not supposed to be a one-size-fits-all straitjacket. The 'internal market' consists of the elimination of internal barriers to trade (including, therefore, standardisation of terms to produce a common 'trade vocabulary') and distortions of fair competition by governments and monopolies. It doesn't touch the member states' rights to compete with each other on fair terms, or to order their internal workings (like minimum wages), because that's not the point - except where it falls under elimination of internal barriers or distortion of competition.

cordially,
Scofflaw

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hatrickpatrick wrote: »

...Why is it that inflation, wages, prices, etc are still different across the board?

I mean you have a lot of talk at the moment about multinationals pulling out of Western Europe and moving to the newer Eastern EU states where it's cheaper, but is the whole concept of "The Eurozone" not supposed to be that it resembles one economy?

(NOTE: No Lisbon stuff in here please! )

Even in a "one economy" such as the US there frequently is significant variations in the economic performance in the various economic regions. California's state budget situation is, or at least was until very recently, about to rival Iceland. Other states meanwhile had budgets in the black (e.g. Texas). And you really don't want to talk about the economic trend of somewhere like Detroit over the last few years...

hatrickpatrick

Well that's a good example - why IS Dublin more expensive than most places out the country? I especially noticed huge discrepancies between pub prices in Kerry and Dublin when I stayed in Kerry this summer

Is it because smaller population = fewer customers = prices must be lower to attract them?

I mean things like electricity, gas and tax are the same across the board... Property / rent prices maybe?

PopeBuckfastXVI

hatrickpatrick wrote: »

Well that's a good example - why IS Dublin more expensive than most places out the country? I especially noticed huge discrepancies between pub prices in Kerry and Dublin when I stayed in Kerry this summer

Is it because smaller population = fewer customers = prices must be lower to attract them?

I mean things like electricity, gas and tax are the same across the board... Property / rent prices maybe?

Simplistic view:

More jobs located in Dublin = More people working in Dublin = More people shopping in Dublin = More people coming into a central shop = More competition for central shops due to a fixed amount of land = Higher costs on shop rent = Higher markup on goods.

Scofflaw

hatrickpatrick wrote: »

Well that's a good example - why IS Dublin more expensive than most places out the country? I especially noticed huge discrepancies between pub prices in Kerry and Dublin when I stayed in Kerry this summer

Is it because smaller population = fewer customers = prices must be lower to attract them?

I mean things like electricity, gas and tax are the same across the board... Property / rent prices maybe?

Property and rental prices would be a major factor - both directly on the business in terms of premises, and on wages so that employees can afford housing.

If you're interested in that kind of question, The Undercover Economist is quite a fun read.

cordially,
Scofflaw