The economics of cyber risk
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From Aniket Baksy and Daniele Caratelli, here is part of the abstract:
Because larger firms are more attractive targets but also invest more in protection, the model generates an inverse-U relationship between firm size and attack risk, consistent with the data. Introducing cyber risk reduces firm entry by 3.6 percent, aggregate productivity by 0.6 percent, and total output by 1.8 percent. These effects arise from general equilibrium adjustments in entry, firm size, and spillovers that are absen
Because larger firms are more attractive targets but also invest more in protection, the model generates an inverse-U relationship between firm size and attack risk, consistent with the data. Introducing cyber risk reduces firm entry by 3.6 percent, aggregate productivity by 0.6 percent, and total output by 1.8 percent. These effects arise from general equilibrium adjustments in entry, firm size, and spillovers that are absen
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