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State Aid to Business in the European Union: a Focus on the Car Sector. --- (R&R for Industrial and Corporate Change).
(2012)
  • Marcella Nicolini, University of Pavia
  • Carlo Scarpa
  • Paola Valbonesi
Abstract

Making use of an original dataset we empirically investigate the determinants of state aid to the car industry in the European Union. The EU regulatory system on state aids and the long history of governments’ grants to this industry make this an interesting case study. Our findings show that in the period 1992-2008 -controlling for a number of variables - subsidies to the car sector have shown a decreasing trend, mainly because of the reduction in the aid aimed at increasing the productive capacity of firms. We find a pattern of a dynamic strategic game among EU countries, whereby aiding a firm induces other member states to grant more subsidies; this seems to be mainly driven by rescue and resctruring aid. Overall, economic and political variables (industry’s value added, country’s income per capita, election year, government’s political orientation) are found to significantly affect aid to the car industry.

Keywords
  • state aid to business,
  • car sector,
  • EU competition policy
Disciplines
Publication Date
Fall September, 2012
Comments
Working Paper, 1/2012, Dipartimento di Scienze Economiche e Aziendali, University of Pavia
Citation Information
Marcella Nicolini, Carlo Scarpa, and Paola Valbonesi. "State Aid to Business in the European Union: a Focus on the Car Sector", Working Paper N. 1 (09-12) 2012, University of Pavia. Available at: http://epmq.unipv.eu/site/home/ricerca/dem-working-paper-series.html