The Role of Additionality in the EU Cohesion Policies
Additionality is one of the key principles driving the functioning of the EU
Cohesion Policies (ECP). 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;
2013-12-16
Publications Office of the European Union
JRC81893
978-92-79-33737-6,
1831-9424,
EUR 26219,
OP LF-NA-26219-EN-N,
http://ftp.jrc.es/EURdoc/JRC81893.pdf,
https://publications.jrc.ec.europa.eu/repository/handle/JRC81893,
10.2791/25857,
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