This chapter foregrounds the role of law in shaping the creative industries. A law and political economy (LPE) perspective towards state policy for audiovisual industries at both Irish and EU level allow for consideration of the key role of the state and state-like entities in the shaping of the production of cultural goods, in particular through the provision of a favourable taxation regime to incentivise particular forms of production within a nation-state. Markets are not neutral but social institutions embedded in multiple histories. It expands upon the significance of the European Union state aid regulatory dimension to the creative industries. The ecology of audiovisual production is a creature of law and politics which has been crafted by the state. This chapter identifies and interrogates the role of tax expenditures for incentivising production from a legal perspective. This approach centres questions on the role of power in the conceptualising of cultural value in cultural and creative industries and particularly in the audiovisual industries. It asks how laws and policies create, reproduce and protect political-economic power: for whom, and with what results. Contrary to recognition that markets are natural/neutral/self-regulating, LPE recognises their artificiality, and addresses broad socio-economic consequences of law. These two chapters offer a new way to understand the constitutive role of the state in shaping the creative industries. The following chapters apply the framework to the operation of the audiovisual tax credit regime in the Irish context.