The study proposes an approach to evaluate regional policies accounting for the externalities, linked to the regional context and the spatial distribution of the targeted firms, possibly generated by the policy. The analysis explores the effects of a capital subsidisation programme directed to hotels in the Trentino province through the Provincial Law 6/99. The results show a positive direct effect of subsidies on hotel outcomes. The externalities generated, however, acted as a moderator by fading out the overall effect of the policy.
Keywords: Regional policy; iptwmodels; hotel industry.
Jel Code: C32, R58, L83