One Kind of Lawlessness: Estimating the Welfare Cost of Somali Piracy
Timothy Besley (),
Thiemo Fetzer and
UFAE and IAE Working Papers from Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC)
This paper estimates the effect of piracy attacks on shipping costs using a unique data set on shipping contracts in the dry bulk market. We look at shipping routes whose shortest path exposes them to piracy attacks and find that the increase in attacks in 2008 lead to around a ten percent increase in shipping costs. We use this estimate to get a sense of the welfare loss imposed by piracy. Our intermediate estimate suggests that the creation of $120 million of revenue for pirates in the Somalia area led to a welfare loss of over $1.5 billion.
Keywords: piracy; welfare loss; maritime transport; Somalia; private security; law and order; property rights (search for similar items in EconPapers)
JEL-codes: D74 F1 K42 O18 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-law and nep-tre
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Working Paper: One Kind of Lawlessness: Estimating the Welfare Cost of Somali Piracy (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:aub:autbar:898.12
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