Artikel

Observable cyber risk on cournot oligopoly data storage markets

With the emergence of global digital service providers, concerns about digital oligopolies have increased, with a wide range of potentially harmful effects being discussed. One of these relates to cyber security, where it has been argued that market concentration can increase cyber risk. Such a state of affairs could have dire consequences for insurers and reinsurers, who underwrite cyber risk and are already very concerned about accumulation risk. Against this background, the paper develops some theory about how convex cyber risk affects Cournot oligopoly markets of data storage. It is demonstrated that with constant or increasing marginal production cost, the addition of increasing marginal cyber risk cost decreases the differences between the optimal numbers of records stored by the oligopolists, in effect offsetting the advantage of lower marginal production cost. Furthermore, based on the empirical literature on data breach cost, two possibilities are found: (i) that such cyber risk exhibits decreasing marginal cost in the number of records stored and (ii) the opposite possibility that such cyber risk instead exhibits increasing marginal cost in the number of records stored. The article is concluded with a discussion of the findings and some directions for future research.

Sprache
Englisch

Erschienen in
Journal: Risks ; ISSN: 2227-9091 ; Volume: 8 ; Year: 2020 ; Issue: 4 ; Pages: 1-15 ; Basel: MDPI

Klassifikation
Wirtschaft
Thema
Cournot market
oligopoly
market concentration
cyber risk
data breach
digital services

Ereignis
Geistige Schöpfung
(wer)
Franke, Ulrik
Hoxell, Amanda
Ereignis
Veröffentlichung
(wer)
MDPI
(wo)
Basel
(wann)
2020

DOI
doi:10.3390/risks8040119
Handle
Letzte Aktualisierung
10.03.2025, 11:46 MEZ

Datenpartner

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ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.

Objekttyp

  • Artikel

Beteiligte

  • Franke, Ulrik
  • Hoxell, Amanda
  • MDPI

Entstanden

  • 2020

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