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Abstract
Agri-Environmetal Policy (AEP) application raised a wide debate about the determination of payment
levels and the efficiency of the economic instruments used. In particular, some aspects support the
hypothesis of relevant rents due to an overcompensation of farmers� compliance costs. A policy tool
suitable for improving the efficiency of AEP can be the adoption of auctions mechanisms in contract
allocation. In theory, in an auction mechanism, the farmers have incentives to reveal their compliance
costs, helping to reduce the information rents and increase cost-effectiveness. A crucial problem
therefore arises from the uneven distribution of information between landowners and the public
administration. Auctions mechanism can be useful in reducing opportunistic behavior that arises due
to these information asymmetries. The aim of this work is to simulate the potential contribution of
auctions mechanism to the efficiency of Agri-Environmental contracts in Emilia Romagna Region
(Italy). The results give some indications about the efficiency of auction mechanism compared to other
contract mechanism.