The Effect of ‘State Aid’ on Market Shares: An Empirical Investigation in an EU Member State

Buts, Caroline; Jegers, Marc

doi:10.1007/s10842-012-0132-y

Cited by 11 publications

(10 citation statements)

References 5 publications

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“…In our data this is not the case as we find statistically significant effects of manufacturing aid already with contemporaneous values of our explanatory variables. The reason for the difference in results could be explained by the fact we are using sector-level data whereas Buts and Jegers (2013) undertake their analysis at the firm level. We nevertheless check the effects of state aid with lagged variables which are summarised in Table 6.…”

Section: Robustness Checksmentioning

confidence: 95%

“…In the context of industrial policy there is always the issue of the time lag between implementation of the respective support measure, here the provision of subsidies, and the date when the measure takes effect. For example, Buts and Jegers (2013) find that the positive effect of Belgian firms receiving state aid on their market share takes effect only with a lag of two years. In our data this is not the case as we find statistically significant effects of manufacturing aid already with contemporaneous values of our explanatory variables.…”

Section: Robustness Checksmentioning

confidence: 99%

“…The effect of state aid on firm performance has also been investigated at the firm level. For example, using a large sample of Belgian firms Buts and Jegers (2013) find that firms receiving state aid experience gains in their market shares with a time lag of two years. There are also a number of papers that estimate the impact of specific aid programmes on firm performance.…”

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confidence: 99%

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State Aid and Export Competitiveness in the EU

Stöllinger

Holzner

2016

J Ind Compet Trade

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Despite the proclaimed return of industrial policy (Wade, 2012) state aid provided by EU Member States remains at a historically low level. This is partly explained by the unique institutional arrangement in the EU which empowers the European Commission to monitor and restrict state aid activities of Member States. Making use of European state aid statistics over the period 1995-2011 we employ an augmented macroeconomic export function to investigate the relationship between state aid for the manufacturing sector and Member States' export performance. With manufacturing value added exports serving as a proxy for export performance, our model suggests that a 10% increase in manufacturing aid increases exports by 0.67% for the average EU country. The result is confirmed by instrumental variable estimation. We also find that the impact of state aid on exports is increasing with government effectiveness leading to large differences in the leverage of aid expenditures to promote export performance across Member States.

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Section: Robustness Checksmentioning

confidence: 95%

Section: Robustness Checksmentioning

confidence: 99%

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confidence: 99%

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State Aid and Export Competitiveness in the EU

Stöllinger

Holzner

2016

J Ind Compet Trade

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“…4 Buts and Jegers (2013) show that State aid results in higher market shares for the aid-receiving firms, as well as an increase in market concentration, using Belgian firm-level data between 2005 and 2008. Aghion et al (2015) include the growth objective in their analysis on industrial policy and competition and find evidence that sectoral policy instruments are associated with higher total factor productivity in a more competitive-friendly environment.…”

Section: Brief Overview Of the Literaturementioning

confidence: 99%

Financial Constraints: State Aid to the Rescue? Empirical Evidence from Belgian Firm-Level Data

Sergant

Cayseele

2018

J Ind Compet Trade

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This paper investigates the relationship between State aid measures, as defined by Article 107 of the Treaty on the Functioning of the European Union (TFEU), and firm performance in terms of total factor productivity (TFP). Under imperfect capital markets, firms might encounter difficulties in accessing sufficient resources to fund their optimal investment plans. The main focus of this paper lies in establishing whether State aid alleviates a firm from such constraints, and thereby enhances its productivity. To this end, we include all State aid cases that were active in Belgian manufacturing between 2003 and 2012. To determine the effects of State aid and financing constraints on performance, we first estimate TFP and classify firms according to their financial health in the absence of aid. The main results confirm the hypothesis, but when allowing for firm heterogeneity, a mitigating role for State aid is only present for initially well-performing firms.

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“…On the other hand, pro-business and pro-market policy may be inherently opposing to the extent that implementing both at the same time will cause the effectiveness of either policy to dwindle. Based on a study of Belgium firms, Buts and Jegers (2013) find a positive relation between subsidies (i.e. grants intended for investment in fixed assets) and firms' market share; this result implies that subsidies distort competition.…”

Section: Evidence and Theory On The Relation Between Industrial Policmentioning

confidence: 99%

Industrial Policy for Growth

Farla

2014

J Ind Compet Trade

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The Effect of ‘State Aid’ on Market Shares: An Empirical Investigation in an EU Member State

Cited by 11 publications

References 5 publications

State Aid and Export Competitiveness in the EU

State Aid and Export Competitiveness in the EU

Financial Constraints: State Aid to the Rescue? Empirical Evidence from Belgian Firm-Level Data

Industrial Policy for Growth

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