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Measuring the Extent of European State Aid Control: An Econometric Analysis of the European Commission Decisions

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Author Info

  • Brouwer, E.
  • Ozbugday, F.C.

    (Tilburg University, Center for Economic Research)

Abstract

This paper provides an analysis of the European Commission (EC) decisions on state aid control using data on 550 state aid cases approved by the EC between 1998 and 2009. More specifically, we measure the determinants of the duration of state aid, total budget of state aid and daily budget of state aid. By using these imperfect proxies, we try to identify the extent of European state aid control. Our results suggest that aid with multiple objectives to achieve has both longer durations and higher amounts of budget. We also find that for some aid objectives or industries, the EC approves cases of aid with both longer durations and higher levels of budget. On the other hand, for some class of aid objectives and industries, there is a trade-off between duration and the level of budget so as to counter-balance the undesired effects. The interpretation of the results imply that the European state aid control, which once was originally intended to address concerns about export subsidies and strategic trade, recently puts more emphasis on market failures mostly associated with externalities and public goods.

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Bibliographic Info

Paper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 2011-010.

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Date of creation: 2011
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Handle: RePEc:dgr:kubcen:2011010

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Web page: http://center.uvt.nl

Related research

Keywords: European competition policy; state aid; survival analysis; quantile regression analysis;

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Cited by:
  1. Nicole Nulsch, 2014. "Is Subsidizing Companies in Difficulties an Optimal Policy? An Empirical Study on the Effectiveness of State Aid in the European Union," IWH Discussion Papers 9, Halle Institute for Economic Research.

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