The Ecouragement from The European Union's on Research and Development Costs

Andreas Vedtofte & Oliver Jansen

Student thesis: Master thesis


This master thesis aims to analyze the incentives behind actions taken by the European Union regarding research and development encouragement. More specifically, this thesis asks the question; How should the European Commission regulate deductions for research and development expenditures to achieve socio-economic efficiency in terms of competition? The answer to this question has important relevance on the subject of EU’s growth and overall market position.
Lately, the EU and its member states have taken new incentives. One of these incentives is to give an extra high deduction on expenditures concerning research and development. It is the purpose of this thesis to illustrate how these expenditures are defined and to analyze if these arrangements violate the terms of legal state aid.
In the current thesis, the Danish deduction rules were assessed in an EU legal perspective and in the context of state aid and selectivity, therefore contributing to the understanding of how EU member states should invest in research and development.
By increasing the deduction rates, the government seeks to create a positive incentive for companies to promote research and development. This incentive leads to positive progress in the European market in areas such as health, welfare, technology, and the overall European economy. However, this can lead to an imbalance in the market and create high barriers to entry among these companies. This thesis analyzed how these barriers are affected and how a dominant company could potentially become more prevalent and exploit its market power, which could lead to a restriction on the incentive to innovate.
Conclusively, the results from the economic analysis will be used to adjust and give guidelines for optimal legal regulation. This will show whether the market is optimally allocated or whether it is necessary to insert rules to change the market structure and thereby optimize the EU's welfare.

EducationsMSc in Commercial Law, (Graduate Programme) Final Thesis
Publication date2020
Number of pages114