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Discretion by the Rules: European State Aid Policy and the 1999 Procedural Regulation

Nikolaos Zahariadis

The Commission is formally empowered to limit the use of state aid by member states to protect their domestic industries, especially since the advent of the SEM. However, there has been no statistical analysis to date to confirm that the Commission is indeed using its powers in this field. Does the Commission matter? What effect do governments have on the disbursement of state aid? Is state intervention in the economy really declining? This paper argues that member states (principals) have given the Commission (agent) inflexible authority to reduce but not eliminate state aid. National governments continue to retain considerable discretion in matters of economic intervention.



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