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The Independent Institute
Working Paper #57

Is Cybersecurity a Public Good? Evidence from the Financial Services Industry

Abstract: After September 11th many government officials have become concerned with the possibility of terrorists launching attacks on the U.S. through the internet. Cybersecurity in industries that form our economy’s “critical infrastructure” have been of particular concern. This paper examines the economics of cybersecurity. The economics of externalities, public goods, market failure, and government failure are all explored as they relate to cybersecurity. The financial services industry is clearly an area of critical infrastructure in our economy. This industry provides a case study to examine whether the market is providing the efficient level of cybersecurity or whether government intervention is required.

Benjamin Powell is a Senior Fellow at the Independent Institute, Director of the Free Market Institute at Texas Tech University. He Independent Institute books include The Economics of Immigration: Market-Based Approaches, Social Science, and Public Policy, Housing America: Building out of Crisis, and Making Poor Nations Rich.

From Benjamin W. Powell
HOUSING AMERICA: Building Out of a Crisis
Could government's pervasive involvement in housing be related to the very real problems of affordability, availability, mortgage defaults and loans, and much more? If so, the appropriate policy response would be to significantly reduce, not increase, government involvement. In reassessing government housing measures, Housing America: Building Out of a Crisis is the authoritative and most comprehensive book available on resolving the housing crisis.