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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.