Efficient and Confidential Reallocation of Contracts: How The Danish Sugar Industry Adapted to The New Sugar Regime

Peter Bogetoft and Kurt Nielsen ()
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Kurt Nielsen: Department of Food and Resource Economics, University of Copenhagen

No 07_2010, MSAP Working Paper Series from University of Copenhagen, Department of Food and Resource Economics

Abstract: The first Danish exchange for sugar beet contracts was established in January 2008. It was also the world’s first major application of a particular new technology, secure multiparty computation (SMC), which ensures the security and cost-effectiveness of such exchanges. The technology can also be used in a number of other applications, including voting, negotiations, and benchmarking. The SMC approach makes it possible to combine private knowledge from a large number of players without ever revealing their individual knowledge. This provides unique opportunities for individual players to act together despite conflicting interests and decentralized knowledge, which, in many contexts, constitute the primary obstacle to the creation of economic gains. This exchange was the culmination of a novel and successful collaboration between economists and cryptologists, and it constitutes a successful operations research project using novel scientific methods to solve a real, large-scale problem. This article describes the background for and the implementation of the exchange and discusses some other potential applications.

Keywords: double auction; secure multiparty computation; sugar beets; data envelopment analysis (DEA) (search for similar items in EconPapers)
JEL-codes: C61 D51 L23 Q13 (search for similar items in EconPapers)
Pages: 15 pages
Date: 2010-12
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