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The Economic Approach to European State Aid Control: A Politico-Economic Analysis

Author

Listed:
  • Karsten Mause

    (University of Münster)

  • Friedrich Gröteke

    (University of Marburg)

Abstract

Since the mid-2000s, the European Commission has employed a so-called ‘more economic approach’ to European state aid control. Under this modified regime, the Commission checks not only whether a state aid has competition-distorting effects, but in addition, whether it enhances social welfare. This reform implies an extension of the Commission’s competences vis-à-vis the Member States as the Commission gets the power to prohibit national state aid regarded as socially wasteful. The Commission explains its reform with the necessity of giving state aid control a sound economic basis. This article, however, demonstrates that the more economic approach – somewhat paradoxically – is not based on a consistent economic view of public policy that would justify the aforementioned shift of competences to the supranational EU level. The economic-theoretical inconsistencies identified in this article may be used by policymakers to rethink some elements of current EU state aid policy.

Suggested Citation

  • Karsten Mause & Friedrich Gröteke, 2017. "The Economic Approach to European State Aid Control: A Politico-Economic Analysis," Journal of Industry, Competition and Trade, Springer, vol. 17(2), pages 185-201, June.
    • Handle: RePEc:kap:jincot:v:17:y:2017:i:2:d:10.1007_s10842-016-0230-3
    DOI: 10.1007/s10842-016-0230-3
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    Cited by:

    1. Feld, Lars P. & Fuest, Clemens & Haucap, Justus & Schweitzer, Heike & Wieland, Volker & Wigger, Berthold U., 2020. "No retreat into fortress Europe!," Kronberger Kreis-Studien 66e, Stiftung Marktwirtschaft / The Market Economy Foundation, Berlin.
    2. Mause, Karsten, 2018. "Internationale Konzerne," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, pages 1751-1760.
    3. Mause, Karsten, 2018. "Subventionen/Subventionierung," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, pages 1261-1270.

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    More about this item

    Keywords

    European integration; European Commission; Competition policy; State aid;
    All these keywords.

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F55 - International Economics - - International Relations, National Security, and International Political Economy - - - International Institutional Arrangements
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue

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