The control of state aid from the EU is an essential component of the competition policy and vital part of an effective competition and free trade. Despite its importance, this area of competition law lacked behind in the scientific research compared to the research of the regulation of cartels and abuse of dominant position. Being explored in the thesis is the notion of state aid, then how is this concept defined in the legislation, case law and literature with a particular focus on small and medium-sized businesses and agribusinesses. Dissertation analyzes the development of state aid in the current period, mainly how the European institutions respond to changing economic conditions. The thesis is divided into several logical parts. The first part describes the methodology and methods used in the work such as the Coase's Theorem and the case study and it explains how the relation between law and economics works. The second part focuses on primary and secondary legislation concerning state aid. The third part deals with the analysis of the concept of state aid in terms of existing law and the development of understanding of the concept in the past. The fourth part deals with current changes in the allocation of state aid. The conclusion discusses the results and problematic areas to be focused on by the EU institutions are proposed
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