The role of additionality in the EU Cohesion Policies: An example of firm-level investment support
EERI Research Paper Series No 17/2018
Additionality is one of the key principles driving the functioning of the EU Cohesion Policies. The present paper studies how additionality affects the impact of firm-level investment support on firm investment behaviour in differently competitive markets. We find that the investment additionality and the level of competition importantly affect the firm investment behaviour. Imposing additionality to the ECP investments in perfectly competitive markets causes distortions in the capital market and leads to lower welfare levels. In contrast, without the enforcement of additionality, the distortions are zero and the investment support fully benefits the firms. In an imperfectly competitive environment the firm-level investment support may increase investment and may be welfare increasing with and without the enforcement of the investment additionality.
BRANDSMA Andries;
CIAIAN Pavel;
KANCS D'Artis;
2022-06-27
Economics and Econometrics Research Institute
JRC118237
978-92-76-11919-7 (online),
OP KJ-01-19-786-EN-N (online),
http://eeri.eu/documents/wp/EERI_RP_2018_17.pdf,
https://publications.jrc.ec.europa.eu/repository/handle/JRC118237,
10.2760/123633 (online),
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