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Subventions et politique de concurrence

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  • Patrick Legros

Abstract

Transfers to firms and regions are made both at the level of member states (state aids) and at the level of the European Commission (Structural Funds). State aids can take different forms: direct (transfers, tax exemptions) or indirect (e.g. the definition of the reserved area in network industries). There are significant cross-country differences both in the magnitude and the type of instruments used for state aids. The European Commission acts as a de-facto regulator by using competition law to approve state aids. We analyze the rationale of this two step process by pointing out the benefits of decentralizing redistributive decisions to the member states and the costs linked to reduced coordination (the use of structural funds, viewed as a complement to state aids, reduces some of these costs). We then point out that in a second best world objectives of redistribution are not incompatible with competition but that their relationship is less straightforward than with perfect markets; this has consequences for the rationale of having block exemptions, and for the effects of structural funds.

Suggested Citation

  • Patrick Legros, 2004. "Subventions et politique de concurrence," ULB Institutional Repository 2013/7058, ULB -- Universite Libre de Bruxelles.
  • Handle: RePEc:ulb:ulbeco:2013/7058
    Note: SCOPUS: ar.j
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    References listed on IDEAS

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    1. Devereux, Michael P & Griffith, Rachel, 2003. "Evaluating Tax Policy for Location Decisions," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 10(2), pages 107-126, March.
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    5. Vincent Dupont & Philippe Martin, 2006. "Subsidies to poor regions and inequalities: some unpleasant arithmetic," Journal of Economic Geography, Oxford University Press, vol. 6(2), pages 223-240, April.
    6. Patrick Legros & Andrew Newman, 2001. "Segregation, efficiency and equity," ULB Institutional Repository 2013/7060, ULB -- Universite Libre de Bruxelles.
    7. Dixit, Avinash K & Kyle, Albert S, 1985. "The Use of Protection and Subsidies for Entry Promotion and Deterrence," American Economic Review, American Economic Association, vol. 75(1), pages 139-152, March.
    8. Collie, David R., 2000. "State aid in the European Union: The prohibition of subsidies in an integrated market," International Journal of Industrial Organization, Elsevier, vol. 18(6), pages 867-884, August.
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