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Modelling The Effectiveness Of Cross-Compliance Under Asymmetric Information

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  • Bartolini, Fabio
  • Gallerani, Vittorio
  • Raggi, Meri
  • Viaggi, Davide

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 mechanisms of control and sanctions. The objective of this paper is to present a reference framework for the analysis of cross-compliance under asymmetric information and to test the empirical relevance of the problem. 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/noncompliance depends mainly on the amount of single farm payment entitlements compared with the total land.. The main message, however, is that, in order to increase effectiveness, environmental prescriptions as well as control effort should be considered as a variable to be adapted to incentive compatibility criteria.

Suggested Citation

  • Bartolini, Fabio & Gallerani, Vittorio & Raggi, Meri & Viaggi, Davide, 2008. "Modelling The Effectiveness Of Cross-Compliance Under Asymmetric Information," 107th Seminar, January 30-February 1, 2008, Sevilla, Spain 6670, European Association of Agricultural Economists.
    • Handle: RePEc:ags:eaa107:6670
    DOI: 10.22004/ag.econ.6670
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    References listed on IDEAS

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    1. C. Choe & I. Fraser, 1998. "A Note on Imperfect Monitoring of Agri‐Environmental Policy," Journal of Agricultural Economics, Wiley Blackwell, vol. 49(2), pages 250-258, June.
    2. Chongwoo Choe & Iain Fraser, 1999. "Compliance Monitoring and Agri‐Environmental Policy," Journal of Agricultural Economics, Wiley Blackwell, vol. 50(3), pages 468-487, September.
    3. Rob Fraser, 2004. "On the Use of Targeting to Reduce Moral Hazard in Agri‐environmental Schemes," Journal of Agricultural Economics, Wiley Blackwell, vol. 55(3), pages 525-540, November.
    4. Rob Hart, 2005. "Combating moral hazard in agri-environmental schemes: a multiple-agent approach," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 32(1), pages 75-91, March.
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    Keywords

    Agricultural Finance; Farm Management; Research Methods/ Statistical Methods;
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