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The Economic Costs and Implications of High-Technology Hardware Theft

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This microeconomic study is frequently cited. Readers may have seen reference to The Economic Costs and Implications of High-Technology Hardware Theft already, but one has to read the book to appreciate it. The authors set out to estimate the direct and indirect costs resulting from the theft of hi-tech products. Then they evaluate the success of extant security measures against the theft of hi-tech products. Last, they sort out what they think holds the greatest potential for success in minimizing the impact of hi-tech theft on hi-tech firms, industry, and the larger society.

It finds that direct costs are in the $250 million range, varying across firms depending on market conditions. Indirect costs are five times higher than direct costs, and include higher product prices for consumers, lost sales, and policing costs. The result a total economic cost of $5 billion plus.

Thus, when in planning firms look only at the direct costs of theft (which are small and easily passed on to consumers), they certainly fail to account for "correct incentives for investing in security" (pp. xvi-xvii). The consequence is ineffective policy. Five $5 billion plus is a huge loss; it suggests that firms design security measures into their products such what the book calls "poison cookies). Even more effective is collaboration between hi-tech producers and law enforcement. Pages 36-40 beautifully state the policy implications of the study.

The three appendices to the book and the bibliography make informative reading in themselves. Everything in only 63 pages. An interesting book, indeed!!

Amavilah, Author
Modeling Determinants of Income in Embedded Economies
ISBN: 1600210465