Working Paper #57

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


        
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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.


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Few topics in current affairs are as contentious as immigration. Yet despite the controversies, social scientists who study immigration largely agree about its effects, whatever differences they may have about how a nation should change its policies. Their findings, however, have been buried in academic journals accessible only to other scholars—until now. With the publication of The Economics of Immigration: Market-Based Approaches, Social Science, and Public Policy, edited by Benjamin Powell, readers can now easily access the substance of the vast scholarly literature about a subject that touches millions of lives.