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How Economics and Information Security Affects Cyber Crime and What It Means in the Context of a ... - page 2 / 7





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while individual users may be incentivized to purchase anti‐virus to protect their system, they would probably not purchase software to stop attacks against a third party, such as Amazon.

The Lemon Market economic theory also predicts that information technology products will be inherently insecure (Anderson, 2009). Security in products is a trust good. Because a buyer is unable to distinguish between a good used car and a lemon, they are only willing to pay the amount for a lemon, so the price drops. In general, secure products are indistinguishable from insecure ones, so companies are less incentivized to produce secure products because the buyer is unable to tell the difference.

So in essence, economic theory can explain the perverse incentives that create the current state of security.

Worldwide Economic Crisis

The current worldwide economic crisis has caused recessions in more than 100 countries around the globe. Many factors have contributed to this recession, but one key aspect, the globalization of capitalism, has made the impact more global than with previous recessions. Globalization refers to the global free trade of specialized goods and services between nations. For example, the US exports steel to Japan, and Japan exports electronics to the US.

With a global recession, emerging markets that have relied on the US for economic stability have felt the effect of the recession more deeply than others. The so‐called emerging market, or BRIC countries (Brazil, Russia, India, and China), are currently experiencing recessions that are severely affecting their economies (Roubini, 2009). These countries have also historically invested large amounts of money to produce technologically skilled workers.

Brazil has invested many millions of dollars to get its country’s Internet infrastructure completed. India’s technology revolution is the direct result of the massive outsourcing of IT and software development to the country. The Chinese government has invested heavily in education and technological infrastructure. And finally Russia, after the collapse of the Communist government, now has a large organized criminal element that has been actively recruited former computer specialists to conduct cyber crime campaigns (Krebs, 2007).

Cyber Crime

Cyber crime is often defined as a crime committed online with the aid of a computer or networks. Typical activities of cyber crime can include the following:

  • Child pornography

  • Botnets

  • SPAM

  • Identity theft


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