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Cybersecurity: Stakeholder incentives, externalities, and policy options

Author

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  • Bauer, Johannes M.
  • van Eeten, Michel J.G.

Abstract

Information security breaches are increasingly motivated by fraudulent and criminal motives. Reducing their considerable costs has become a pressing issue. Although cybersecurity has strong public good characteristics, most information security decisions are made by individual stakeholders. Due to the interconnectedness of cyberspace, these decentralized decisions are afflicted with externalities that can result in sub-optimal security levels. Devising effective solutions to this problem is complicated by the global nature of cyberspace, the interdependence of stakeholders, as well as the diversity and heterogeneity of players. The paper develops a framework for studying the co-evolution of the markets for cybercrime and cybersecurity. It examines the incentives of stakeholders to provide for security and their implications for the ICT ecosystem. The findings show that market and non-market relations in the information infrastructure generate many security-enhancing incentives. However, pervasive externalities remain that can only be corrected by voluntary or government-led collective measures.

Suggested Citation

  • Bauer, Johannes M. & van Eeten, Michel J.G., 0. "Cybersecurity: Stakeholder incentives, externalities, and policy options," Telecommunications Policy, Elsevier, vol. 33(10-11), pages 706-719, November.
    • Handle: RePEc:eee:telpol:v:33:y::i:10-11:p:706-719
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    Citations

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    Cited by:

    1. Mazaher Kianpour & Stewart J. Kowalski & Harald Øverby, 2021. "Systematically Understanding Cybersecurity Economics: A Survey," Sustainability, MDPI, vol. 13(24), pages 1-28, December.
    2. Malecki, Edward J., 2017. "Real people, virtual places, and the spaces in between," Socio-Economic Planning Sciences, Elsevier, vol. 58(C), pages 3-12.
    3. Alain Mermoud & Marcus Matthias Keupp & Kévin Huguenin & Maximilian Palmié & Dimitri Percia David, 2019. "To share or not to share: A behavioral perspective on human participation in security information sharing," Post-Print hal-02147702, HAL.
    4. Rosie Collins & Cavan O’Connor-Close & Aria Zhang, 2020. "Cyber incident cost estimates and the importance of building resilience," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 83, pages 1-17, February.
    5. Shin, Dong-Hee & Jung, Jaemin, 2012. "Socio-technical analysis of Korea's broadband convergence network: Big plans, big projects, big prospects?," Telecommunications Policy, Elsevier, vol. 36(7), pages 579-593.
    6. Karen Renaud & Verena Zimmermann & Tim Schürmann & Carlos Böhm, 2021. "Exploring cybersecurity-related emotions and finding that they are challenging to measure," Palgrave Communications, Palgrave Macmillan, vol. 8(1), pages 1-17, December.
    7. Kox, Henk L.M., 2013. "Cybersecurity in the perspective of Internet traffic growth," MPRA Paper 47883, University Library of Munich, Germany.
    8. e Silva, Karine, 2013. "Europe's fragmented approach towards cyber security," Internet Policy Review: Journal on Internet Regulation, Alexander von Humboldt Institute for Internet and Society (HIIG), Berlin, vol. 2(4), pages 1-8.
    9. Viktoria Gisladottir & Alexander A. Ganin & Jeffrey M. Keisler & Jeremy Kepner & Igor Linkov, 2017. "Resilience of Cyber Systems with Over‐ and Underregulation," Risk Analysis, John Wiley & Sons, vol. 37(9), pages 1644-1651, September.
    10. Brenden KUERBIS & Milton L. MUELLER, 2011. "Negotiating a New Governance Hierarchy: An Analysis of the Conflicting Incentives to Secure Internet Routing," Communications & Strategies, IDATE, Com&Strat dept., vol. 1(81), pages 125-142, 1st quart.

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