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Determinants of state aid to firms: the case of the European automotive industry

Author

Listed:
  • Marcella Nicolini
  • Carlo Scarpa
  • Paola Valbonesi

Abstract

Using an original database for the 1992–2008 period, we investigate the determinants of state aid to the automotive industry in the European Union (EU). We find evidence that EU policies have been effective in reducing state aid and re-orienting it toward horizontal objectives. However, national politics still have considerable relevance. During election years, governments are more generous, and this is particularly true in EU countries with proportional representation. Finally, a strategic game between countries seems to take place, whereby a country’s decision to grant aid seems to be responsive to aid previously granted by other member states.

Suggested Citation

  • Marcella Nicolini & Carlo Scarpa & Paola Valbonesi, 2017. "Determinants of state aid to firms: the case of the European automotive industry," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 26(3), pages 399-420.
    • Handle: RePEc:oup:indcch:v:26:y:2017:i:3:p:399-420.
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    File URL: http://hdl.handle.net/10.1093/icc/dtw023
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    Citations

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    Cited by:

    1. Luciano Fanti & Domenico Buccella, 2021. "Strategic trade policy with interlocking cross-ownership," Journal of Economics, Springer, vol. 134(2), pages 147-174, October.
    2. Marco Schito, 2021. "A Sectoral Approach to the Politics of State Aid in the European Union: an Analysis of the European Automotive Industry," Journal of Industry, Competition and Trade, Springer, vol. 21(1), pages 1-31, March.

    More about this item

    JEL classification:

    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods
    • L62 - Industrial Organization - - Industry Studies: Manufacturing - - - Automobiles; Other Transportation Equipment; Related Parts and Equipment
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General

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