Incentives for investments in defensive technology: An economic analysis of the Safety Act

Mattias K Polborn

International Review of Law and Economics, 2023, vol. 73, issue C

Abstract: Civilian targets of terrorist or criminal attacks (e.g., sport stadiums, chemical or nuclear industry; infrastructure such as ports or pipelines) are often owned by the private agents who choose how to guard against potential attacks. This creates an important externality problem, as some of the benefits of better protection accrue to other private agents who would suffer from an attack. We analyze a model in which a social planner wants to provide incentives for the deployment of defensive technologies. Our results show that some features of the Safety Act, enacted after the 2001 terror attacks, are probably counterproductive.

Keywords: Safety Act; Liability limits (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:irlaec:v:73:y:2023:i:c:s0144818822000722

DOI: 10.1016/j.irle.2022.106116

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