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

Author

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  • Fatih Cemil ÖZBUĞDAY
  • Erik BROUWER
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. 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 to counter-balance the undesired effects. The interpretation of the results implies 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.

Suggested Citation

  • Fatih Cemil ÖZBUĞDAY & Erik BROUWER, 2016. "Measuring the Extent of European State Aid Control: An Econometric Analysis of the European Commission Decisions," Sosyoekonomi Journal, Sosyoekonomi Society, issue 24(30).
    • Handle: RePEc:sos:sosjrn:160403
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    References listed on IDEAS

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    Cited by:

    1. Nulsch, Nicole, 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 9/2014, Halle Institute for Economic Research (IWH).
    2. Pavlova, N.S. (Павлова, Н.) & Baulina, A.A. (Баулина, А.) & Shastitko, Andrey E. (Шаститко, Андрей), 2016. "Assessment of the Admissibility of the Horizontal Co-Operation Agreements in the Context of Environmental Externalities [Оценка Допустимости Горизонтальных Соглашений О Кооперации В Контексте Эколо," Working Papers 452, Russian Presidential Academy of National Economy and Public Administration.
    3. Ruud van Druenen & Pieter Zwaan & Ellen Mastenbroek, 2022. "Getting State Aid Approved by the European Commission: Explaining the Duration of Preliminary Investigations in the State Aid Notification Procedure," Journal of Common Market Studies, Wiley Blackwell, vol. 60(3), pages 545-561, May.
    4. Alves, Amanda M. & Brousseau, Eric & Yeung, Timothy Yu-Cheong, 2021. "The dynamics of institution building: State aids, the European commission, and the court of justice of the European Union," Journal of Comparative Economics, Elsevier, vol. 49(3), pages 836-859.

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    More about this item

    Keywords

    State Aid Control; Europe; Duration Analysis; Quantile Regression.;
    All these keywords.

    JEL classification:

    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
    • L50 - Industrial Organization - - Regulation and Industrial Policy - - - General
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies

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