State aid - Economic analysis - EC Competition policy - Efficency of aids - Lobbying - Negative cross-country externalities - Assessment criteria - Consumer surplus - Joint surplus of consumers and taxpayers

The economic policy of State Aids: The assessment criteria

In the absence of any control at Community level, individual European States might grant large amounts of economically inefficient aid to businesses. This results from the weight of special interests and short-term preoccupations in domestic policymaking, as well as from the presence of negative cross-country externalities. Addressing various justifications for a European-wide State aid control policy allows us to shed light on the flaws of two often discussed assessment criteria. Prohibiting aid only if it induces a negative net external effect, or if it causes consumer surplus to fall, would lead to an overly lax policy. A criterion based on the joint surplus of consumers and taxpayers appears to be more appropriate.

*This article is an automatic translation of the original article, provided here for your convenience. Read the original article. 1. For a long time, economists have paid little attention to state aid. This relative lack of interest - very striking in view of the economists' long involvement in debates on merger control and the repression of anti-competitive practices - can be explained first of all by a prosaic reason: the bulk of economic research is carried out in the United States, a country which is not familiar with State aid control. At a deeper level, State aid control policy has long appeared to economists to be based on imprecise notions that are difficult to grasp, at least for those with no legal subtlety. While it is often possible to build bridges between law and economics,

Access to this article is restricted to subscribers

Already Subscribed? Sign-in

Access to this article is restricted to subscribers.

Read one article for free

Sign-up to read this article for free and discover our services.