Economic principles of state aid control

Justus Haucap and Ulrich Schwalbe

No 17, DICE Discussion Papers from Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE)

Abstract: This paper summarizes the economic principles of European state aid control. We start with a discussion of the economic justification for state aid control, including the definition of state aid in European law and exceptions to the general ban of state aid. We then explore the motives for granting state aid, ranging from the correction of market failures over political motives to political economy considerations. We then discuss how state aid control fits into the framework of European competition policy before we comment extensively on the more economic approach to state aid control, as implemented by the European Commission, and the state aid action plan.

Date: 2011
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