Networks, hackers, and nonprotected consumers

Florian Bartholomae ()

No 2013,3, Working Papers in Economics from Bundeswehr University Munich, Economic Research Group

Abstract: In this paper a network model is developed in which three players sequentially choose their strategies. In the first stage, a profit-maximizing network firm chooses the price and thus the size of the network. In the second stage the consumers decide whether to join in the network or not. In the last stage a hacker has the opportunity to hack the network and cause damage to the consumer. The success of hacking is based on the protection of the customers. Whereas in the first part of the paper this is given exogenously it is endogenized later on. In an extension, the utility of the hacker as well as the consumers includes psychological costs, thus allowing some further insights. Finally, policy implications are given implying better international cooperation of the law enforcement authorities.

Keywords: hacking; network size; cloud computing; nonprotected consumers (search for similar items in EconPapers)
JEL-codes: D03 K4 L1 L86 (search for similar items in EconPapers)
Date: 2013
New Economics Papers: this item is included in nep-ict and nep-net
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ubwwpe:20133

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