Law & Economics of Cybersecurity
Law and economics of cybersecurity examine the pros and cons of public and private enforcement of Internet security measures. The study of law and economics is the use of economic concepts in the study the efficiency and efficacy of legal rules. Economic theory and quantitative analysis are used to examine the proposal and implementation of policy initiatives, regulations and laws.
Cybersecurity law refers to the legal regulations in place that govern the security of information stored and transferred over the Internet. It is extremely difficult to protect systems against all forms of cybercrime, because perpetrators are constantly changing the way they behave to avoid detection.
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Private Enforcement: Pro
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One option for cybersecurity is to allow each company to create its own individual system. This would allow each individual or company to weigh the cost of implementation and determine how much they want to invest in security versus the relative cost to them of a possible security breach. Permitting private enforcement allows companies and individuals to choose to establish a collective security program to help defray the costs and expand the system of security.
Private Enforcement: Con
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If private enforcement is permitted or required, there is a drawback to sharing information about viruses and security breaches. If one company is able to thwart a security breach, there is no incentive to notify its competitor about the breach and how to protect themselves against it.
There is also the issue of cost. If the cost to establish security is high, and the system relies on private security, only the wealthy will be able to afford to have a secure system.
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Public Enforcement: Pro
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If public enforcement is permitted or required, there is an incentive to disclose information that would improve defenses against possible security breaches. Such disclosure would encourage other companies and individuals to take action before a security breach occurs, thus hindering the spread of a virus or other security breach. Public enforcement also decreases the cost to the individual by spreading the cost across public users.
Public Enforcement: Con
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There are two main criticisms of public enforcement. One is that it will lead to free-riders, or users who benefit from the system without paying for the cost of implementing it. Another is that it will limit innovation. This criticism stems from the concern that if every user had the same system, one virus or security breach could wipe out or disable the entire system. At the same time, some scholars believe that heterogeneity, or a common technology system, is the best way to stop a security breach or virus because there will be a concentrated effort by everyone who uses the system.
Victim
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Under both private and public enforcement possibilities, there is concern by users that they have to disclose information in order to gain security. The other issue of the law and economic analysis of cybersecurity raises is the question of harm. Is the harm to the individual or to the system as a whole? Should the perpetrator be prosecuted and possibly held liable to the individual, or as a perpetrator of a crime against a larger system? Should the Internet service provider be liable for not having a secure system?
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References
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