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The Economics of Online Crime

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  • Tyler Moore
  • Richard Clayton
  • Ross Anderson
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    Abstract

    This paper will focus on online crime, which has taken off as a serious industry since about 2004. Until then, much of the online nuisance came from amateur hackers who defaced websites and wrote malicious software in pursuit of bragging rights. But now criminal networks have emerged -- online black markets in which the bad guys trade with each other, with criminals taking on specialized roles. Just as in Adam Smith's pin factory, specialization has led to impressive productivity gains, even though the subject is now bank card PINs rather than metal ones. Someone who can collect bank card and PIN data, electronic banking passwords, and the information needed to apply for credit in someone else's name can sell these data online to anonymous brokers. The brokers in turn sell the credentials to specialist cashiers who steal and then launder the money. We will examine the data on online crime; discuss the collective-action aspects of the problem; demonstrate how agile attackers shift across national borders as earlier targets wise up to their tactics; describe ways to improve law-enforcement coordination; and we explore how defenders' incentives affect the outcomes.

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    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/jep.23.3.3
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    Bibliographic Info

    Article provided by American Economic Association in its journal Journal of Economic Perspectives.

    Volume (Year): 23 (2009)
    Issue (Month): 3 (Summer)
    Pages: 3-20

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    Handle: RePEc:aea:jecper:v:23:y:2009:i:3:p:3-20

    Note: DOI: 10.1257/jep.23.3.3
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    References

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    1. Gary S. Becker, 1974. "Crime and Punishment: An Economic Approach," NBER Chapters, in: Essays in the Economics of Crime and Punishment, pages 1-54 National Bureau of Economic Research, Inc.
    2. Jack Hirshleifer, 1983. "From weakest-link to best-shot: The voluntary provision of public goods," Public Choice, Springer, vol. 41(3), pages 371-386, January.
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    Cited by:
    1. Kox, Henk L.M., 2013. "Cybersecurity in the perspective of Internet traffic growth," MPRA Paper 47883, University Library of Munich, Germany.
    2. Tyler MOORE & Richard CLAYTON, 2011. "The Impact of Public Information on Phishing Attack and Defense," Communications & Strategies, IDATE, Com&Strat dept., vol. 1(81), pages 45-68, 1st quart.
    3. Dan Kovenock & Brian Roberson & Roman M. Sheremeta, 2010. "The Attack and Defense of Weakest-Link Networks," Purdue University Economics Working Papers 1256, Purdue University, Department of Economics.
    4. Gauguier, Jean-Jacques, 2009. "L’industrialisation de l’Open Source," Economics Thesis from University Paris Dauphine, Paris Dauphine University, number 123456789/4388 edited by Toledano, Joëlle, September.
    5. Huub Meijers, 2014. "Does the internet generate economic growth, international trade, or both?," International Economics and Economic Policy, Springer, vol. 11(1), pages 137-163, February.
    6. S. Goyal & A. Vigier, 2013. "Attack, Defense and Contagion in Networks," Cambridge Working Papers in Economics 1327, Faculty of Economics, University of Cambridge.

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