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by Silhouette 2932 days ago
And it also makes a difference for a company, as you can set a € price, and it can work for more or less the entire EU.

Unfortunately, that isn't really what happens in practice. Although many states share the same currency, they do not share the same wealth or cost of living. You can't just pick one price for your product or service in Euro and then expect that everyone from France and Germany to Greece and the Eastern European states will be able to afford it.

The EU might like to present itself as a single market, and it tries very hard to force people to set one price that applies throughout. However, the illusion is shattered when it comes into contact with the more diverse reality, and there's always a risk when you artificially distort markets for political reasons that you'll do more harm than good.

1 comments

This is basically the same in the US or any other major country/economic block with a single currency.

Setting a price in the US will mean you also exclude people from poorer regions where cost of living and wages are lower. This is not exclusive in the eurozone.

Also, your last argument makes little sense in my opinion. The EU's predecessors itself massively distorted both steel and coal markets to "force" peace and cooperation through the contintent and deal with the age old problem of nationalism and revenge over old wars...

Could that be considered a bad thing because it distorted the markets? I highly doubt many would agree?

Setting a price in the US will mean you also exclude people from poorer regions where cost of living and wages are lower. This is not exclusive in the eurozone.

I'm not an expert on the relevant policies in the US. Are there laws that prevent charging a different price to customers in one state compared to another, if spending power is much higher in one than the other?

Could that be considered a bad thing because it distorted the markets? I highly doubt many would agree?

I said there was always a risk, not that it was inevitable that any distortion in the markets would be a bad thing. All regulatory actions distort free markets as well, but that doesn't mean all regulation is bad.

In this case, however, we're talking about an EU that typically tries quite hard to prevent businesses from offering something at one price in say Germany and at another price in say Greece. It's quite possible that this prevents some products or services from being financially viable if they are offered at a price the Greeks could afford, while offering the same products or services at a financially viable price the Germans can afford excludes the Greeks entirely, meaning the supplier and/or the Greek consumers lose out either way.

Goods sold online will need to be sold at the same price to each region, sans a sales tax. But goods sold locally can differ greatly in the US. If goods sold locally, such as food, need to be prices similarly in the EU that is bizarre to me. Seems great for the more affluent areas.