Subsidies to firms – balancing regional economic development against negative competition effects

Narrative

Subsidies to firms are widely used by governments to attract and retain investment in disadvantaged regions. These ‘State aids’ are tightly regulated by the European Commission, which requires the negative effects of subsidies on competition to be balanced against the regional benefits. How this balance is achieved is extremely controversial for governments, who are bound by Commission rules. Longstanding EPRC research on the of the State aid rules has fed into the policy process in several countries, enabling them to predict the impact of new policy proposals, question the approach and negotiate policies that better accommodate regional policy objectives.

Impact status	Open
Category of impact	Policy and legislation