Determinants of State Aid

K. Buiren, E. Brouwer

Research output: Working paperDiscussion paperOther research output

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.
Original languageEnglish
Place of PublicationTilburg
PublisherTILEC
Number of pages25
Volume2010-005
Publication statusPublished - 2010

Publication series

NameTILEC Discussion Paper
Volume2010-005

Keywords

  • state aid
  • subsidies
  • intergovernmental competition
  • constitutions
  • political economics
  • econometrics

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    Buiren, K., & Brouwer, E. (2010). Determinants of State Aid. (TILEC Discussion Paper; Vol. 2010-005). TILEC. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1547802