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Determinants of State Aid

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Author Info

  • Buiren, K.
  • Brouwer, E.

    (Tilburg University, Tilburg Law and Economics Center)

Abstract

From economic theory we derive a set of hypotheses on the determination of state aid. Econometric analysis on EU state aid panel data is carried out to test whether the determinants we expect on the basis of theory, correspond to the occurrence of state aid in practice in the EU. We find that political and constitutional characteristics play a significant role in explaining differences in state aid across EU countries. In addition, there are indications that the unilateral incentive for governments to provide state aid – to improve the position of its exporting firms against international competitors – is still in effect in practice, despite the presence of EU state aid control aimed at reducing this unilateral incentive and pursuing the EU’s joint interest. The estimation results however provide indicative information that state aid control is effective.

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Bibliographic Info

Paper provided by Tilburg University, Tilburg Law and Economic Center in its series Discussion Paper with number 2010-005.

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Date of creation: 2010
Date of revision:
Handle: RePEc:dgr:kubtil:2010005

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Web page: http://www.tilburguniversity.nl/tilec/

Related research

Keywords: state aid; subsidies; intergovernmental competition; constitutions; political economics; econometrics;

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Cited by:
  1. Tim Mazzarol & Sophie Reboud, 2005. "Customers as Predictors of Rent Returns to Innovation and Small Firms – an exploratory study," Post-Print hal-00472438, HAL.
  2. Meyer, Jenny, 2008. "The Adoption of New Technologies and the Age Structure of the Workforce," ZEW Discussion Papers 08-045, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  3. Alex Hoen, 2001. "Clusters: Determinants and Effects," CPB Memorandum 17, CPB Netherlands Bureau for Economic Policy Analysis.

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