The Role of Additionality in the EU Cohesion Policies: An Example of Firm-Level Investment Support

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Abstract: 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. Terms of use: Documents in

RHOMOLO: A Dynamic General Equilibrium Modelling Approach to the Evaluation of the European Union's R&D Policies

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