Abstract: Abstract While the identity of the European Union (EU) may have normative and/or other characteristics, it is fundamentally a large single market with significant institutional features and competing interest groups. Given these central characteristics, the EU may be best understood as a market power Europe that exercises its power through the externalization of economic and social market-related policies and regulatory measures. Such an exercise of power, which may occur as intentional or unintentional behaviour, suggests the EU is fully capable of using both persuasive and coercive means and tools to influence international affairs. By scrutinizing the EU's identity, official documents and initial evidence, the article provides an analytical framework for understanding what kind of power the EU is, what the EU says as a power and what the EU does as a power. Keywords: European Unionexternalizationexternal relationsmarket powerpowerregulation ACKNOWLEDGEMENTS For useful comments, the author is grateful to the members of the MERCURY network (http://www.mercury-fp7.net/) – in particular John Armstrong, Mark Aspinwall, David Camroux, Zhimin Chen, Geoffrey Edwards, Christopher Hill, Nadia Klein, John Peterson, Maxi Schoeman, Julie Smith, Nathalie Tocci, Tomas Weiss, and Wolfgang Wessels – as well as Ferdie De Ville, David Howarth, Bart Kerremans, Ian Manners, Abraham Newman, Kalypso Nicolaïdis, Ben Rosamond, Simon Schunz, Michael Smith, Helen Wallace, Alasdair Young, and two anonymous reviewers. Notes Among others, the EU has also been labelled an ethical power (Aggestam Citation2008), fragmented power (Sapir Citation2007), realist power (Zimmermann Citation2007), conflicted trade power (Meunier and Nicolaïdis Citation2006) and transformative power (Leonard Citation2005). This is not the same as equating normative power with 'force for good', a common problem that Manners seeks to avoid (2011: 243). For more on the importance of and issues related to market/economic power, see Newman and Posner Citation(2011). For recent examples of research that provide evidence and broadly conform with the conceptualization of MPE, see the Journal of European Public Policy special issue edited by Jacoby and Meunier Citation(2010) and the Review of International Political Economy special issue edited by Farrell and Newman Citation(2010). For a similar definition, see DeSombre (Citation2000: 7).