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

The first Danish exchange for sugar beet contracts was established in January 2008. It was also the world’s first major application of a new technology, secure multiparty computation (SMC), which ensures the security and cost-effectiveness of such exchanges. The technology can potentially be used in a number of other applications, including voting, negotiations, and benchmarking. SMC makes it possible to combine private knowledge from a large number of parties without ever revealing their individual knowledge. This provides unique opportunities for individual agents to collaborate despite conflicting interests and decentralized knowledge, which, in many contexts, constitute the primary obstacle to the creation of economic gains. The establishment of the Danish contract exchange was the culmination of a novel and successful collaboration between economists and cryptologists. It constitutes a successful operational 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.