IDEAS home Printed from
   My bibliography  Save this paper

Aviation security and terrorism: a review of the economic issues


  • Cletus C. Coughlin
  • Jeffrey P. Cohen
  • Sarosh R. Khan


Following the terrorist attacks on September 11, 2001, the passage of the Aviation and Transportation Act mandated a substantial increase in resources devoted to aviation security. This paper summarizes the specific changes stemming from this legislation. In addition, the paper examines the economic issues underlying the regulation and provision of aviation security. The fact that security at one airport can affect the well being of those at other airports and elsewhere, an example of a network externality (spillover), provides an economic justification for governmental involvement in aviation security. A fundamental question is whether the federal role should be restricted to setting and monitoring security standards or whether the role should also include the financing and implementation of security. A controversial change is that the federal government has assumed responsibility from the airlines and airports for the actual provision of aviation security. Proponents of this change argue that, relative to private provision, public provision reduces the incentives to reduce quality through cost reductions. On the other hand, a public agency might not provide security services efficiently because it can operate in a more-or-less monopolistic way. Furthermore, a public agency might provide an excessive amount of security and incur unnecessary expenses because it is likely to be judged on its security record and not on all the attributes encompassed by air transportation services for consumers. Thus, economic theory does not provide a clear answer to what is likely to be a continuing source of controversy - the appropriate scope of governmental involvement in aviation security.

Suggested Citation

  • Cletus C. Coughlin & Jeffrey P. Cohen & Sarosh R. Khan, 2002. "Aviation security and terrorism: a review of the economic issues," Working Papers 2002-009, Federal Reserve Bank of St. Louis.
  • Handle: RePEc:fip:fedlwp:2002-009

    Download full text from publisher

    File URL:
    Download Restriction: no

    File URL:
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    1. Holmstrom, Bengt & Milgrom, Paul, 1991. "Multitask Principal-Agent Analyses: Incentive Contracts, Asset Ownership, and Job Design," Journal of Law, Economics, and Organization, Oxford University Press, vol. 7(0), pages 24-52, Special I.
    2. Oliver Hart & Andrei Shleifer & Robert W. Vishny, 1997. "The Proper Scope of Government: Theory and an Application to Prisons," The Quarterly Journal of Economics, Oxford University Press, vol. 112(4), pages 1127-1161.
    3. Howard Kunreuther & Geoffrey Heal, 2002. "Interdependent Security: The Case of Identical Agents," NBER Working Papers 8871, National Bureau of Economic Research, Inc.
    4. Edward L. Glaeser, 2001. "Public Ownership in the American City," Harvard Institute of Economic Research Working Papers 1930, Harvard - Institute of Economic Research.
    5. Edward L. Glaeser, 2001. "Public Ownership in the American City," NBER Working Papers 8613, National Bureau of Economic Research, Inc.
    6. Shy,Oz, 2001. "The Economics of Network Industries," Cambridge Books, Cambridge University Press, number 9780521805001, March.
    7. repec:hrv:faseco:30727607 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Friedrich Schneider & Tilman Brück & Daniel Meierrieks, 2010. "The Economics of Terrorism and Counter-Terrorism: A Survey (Part I)," Discussion Papers of DIW Berlin 1049, DIW Berlin, German Institute for Economic Research.
    2. Sweet, Kathleen M. & Suckow, Michael, 2005. "Air Cargo Security- The Cost of Doing Business in the 21st Century," 46th Annual Transportation Research Forum, Washington, D.C., March 6-8, 2005 208055, Transportation Research Forum.
    3. Button, Kenneth & Thibault, Marc, 2005. "The Political Economy Of Maritime Container Security," 46th Annual Transportation Research Forum, Washington, D.C., March 6-8, 2005 208148, Transportation Research Forum.
    4. Oster, Clinton V. & Strong, John S. & Zorn, C. Kurt, 2013. "Analyzing aviation safety: Problems, challenges, opportunities," Research in Transportation Economics, Elsevier, vol. 43(1), pages 148-164.
    5. Prentice, Berry & Hickson, Allister, 2007. "Benefits of Security Measures on Transportation," 48th Annual Transportation Research Forum, Boston, Massachusetts, March 15-17, 2007 207920, Transportation Research Forum.
    6. Sakano, R. & Obeng, K. & Fuller, K., 2016. "Airport security and screening satisfaction: A case study of U.S," Journal of Air Transport Management, Elsevier, vol. 55(C), pages 129-138.
    7. Cohen, Jeffrey P. & Morrison Paul, Catherine J., 2003. "Airport infrastructure spillovers in a network system," Journal of Urban Economics, Elsevier, vol. 54(3), pages 459-473, November.
    8. Gkritza, Konstantina & Niemeier, Debbie & Mannering, Fred, 2006. "Airport security screening and changing passenger satisfaction: An exploratory assessment," Journal of Air Transport Management, Elsevier, vol. 12(5), pages 213-219.


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fip:fedlwp:2002-009. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Kathy Cosgrove). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.