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Effectiveness of cross-compliance under asymmetric information and differentiated compliance constraints

By M. Raggi, F. Bartolini, V. Gallerani and D. Viaggi

Abstract

The effects of cross-compliance depend on the strategies of participation/compliance of farmers, as well as on the ability of public administration to design appropriate policy mechanisms. The objective of this paper is to present a framework for the analysis of cross-compliance under asymmetric information with the option of differentiating commitments across farmers. The methodology is applied to a case study represented by the province of Bologna (Italy). The results show that, in the present conditions of control and sanctions, only a small share of farms is interested in complying with cross-compliance. The profitability of the choice of compliance/non-compliance depends mainly on the amount of single farm payment entitlements compared with the total land. The differentiation of restrictions across farmers, under relevant budget constraints for controls, appears a key strategic components in order to ensure the effectiveness of cross-compliance

Topics: CROSS-COMPLIANCE, AGRICULTURE, PRINCIPAL AGENT, CONTRACTS, SINGLE FARM PAYMENT
Publisher: EAAE
Year: 2008
OAI identifier: oai:cris.unibo.it:11585/60872
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