Table of Contents About the Editors About the Authors V vii Editorial Philipp Werner and Vincent Verouden 1. Purpose 2. Overview 2. 1 First part: notion of aid 2.2. Horizontal rules: compatibility 2.3 Sectorial rules 3. Acknowledgements 1 l 2 2 3 4 5 Chapter J Introduction - The Law and Econoınics ofEU State Aid Control Vincent Verouden and Philipp Werner 1. 2. 3. lntroduction Thc basic rationale ofState aid control in the EU When is a measure State aid? 3.1 Thc concept of"advaııtage" 3.2 Selectivity 3.3 State measure and State resources 3.4 Distortion of competitioıı and effect on trade 4. Compatibility of aid 4.1 Assessment framework 4.2 7 4.3 4.4 State intervention: objective and rationale 4.2.1 Market failures 4.2.2 Equity considerations lncentive effect The negative effects of State aid 4.4. l Thcories ofharm in EU State aid control - a typology 4.4.2 Allocative inefficiencies (Ioss ofwelfare) 4.4.3 Distributional concerns (shifts in welfare) 4.4.4 The nexus between the incentive effect and the effects on competition and trade 5. Econoınic insights for the design of State aid rules 5.1 Empirical insights on the effectiveness of regional State aid 5.2 State aid and efficiency incentives: Compensation for SGEl 7 9 16 17 21 22 23 25 25 29 30 36 38 40 40 41 49 51 53 54 57 Table of Contents 5.3 State aid and pricc signals: aid to compcnsatc fırms for incrcascd F.TS costs 6. Concluding rcrnarks PART J -THE NOTION OF STATEAlD Chaptcr 2 Advantage Giuseppe Conle and James Kavanagh l. Thc notion of advantage 1.1 General principles 1.1. l Direct and indirect advantage 1.1.2 Compensation for structural disadvantages and regulatory burdcns l.1.3 Compensation for services of general economic interest 2. The Market Economy Operator (MEO) test 2.1 General principles 2.2 Application of the MEO test 2.2. l Cases where compliance with market conditions can be directly inferred from transaction-specific market