One Kind of Lawlessness: Estimating the Welfare Cost of Somali Piracy

Timothy Besley, Thiemo Fetzer and Hannes Mueller

No 626, Working Papers from Barcelona School of Economics

Abstract: 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: Property rights; piracy; welfare loss; maritime transport; Somalia; private security; law and order (search for similar items in EconPapers)
JEL-codes: D74 F1 K42 O18 (search for similar items in EconPapers)
Date: 2015-09
New Economics Papers: this item is included in nep-law and nep-tre
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Related works:
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:bge:wpaper:626

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