Bishop, William --- "From Trade to Tutelage: State Aid and Public Choice in the European Union" [2011] ELECD 797; in Govaere, Inge; Quick, Reinhard; Bronckers, Marco (eds), "Trade and Competition Law in the EU and Beyond" (Edward Elgar Publishing, 2011)

Book Title: Trade and Competition Law in the EU and Beyond

Editor(s): Govaere, Inge; Quick, Reinhard; Bronckers, Marco

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9780857935663

Section: Chapter 26

Section Title: From Trade to Tutelage: State Aid and Public Choice in the European Union

Author(s): Bishop, William

Number of pages: 12

Extract:

26. From trade to tutelage: state aid
and public choice in the
European Union
William Bishop*

26.1 GENESIS

European state aid control is an odd constitutional entity. Such control is
not found in other economic federations. For example in the United States,
Canada or Australia there is no control of the equivalent of state aid.
NAFTA too knows nothing of state aids, or at least has implemented
nothing. In these economic unions, state aid is commonly practiced, is
ubiquitous even, yet nobody much worries about it. Every now and then the
state of Washington, say, pays a lot of money to, say, Boeing not to move its
manufacturing facilities away. The state of Alabama tries to attract a
chemical company to locate even more plant in Mobile Bay. And Ontario
and New South Wales offer similar inducements. It happens all the time. It
is also true that public discussion does sometimes come to the conclusion
that these subsidies are ill judged. The various states and provinces reach
this conclusion without the wise of any outside agencies ­ such as their own
federal governments or European Commission ­ standing in an examina-
tion over them.
The microeconomics and industrial economics now standard antitrust
analysis is of little help in understanding state aid. But one branch of
economics that does help ­ the economics of politics and public decision-
making, called `public choice'. In particular there are three useful concepts
from that branch of economics: the self-enforcing constitution, side pay-
ments and blame- ...