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Endogenous Prizes in Security Contests

Authors: Craig S Wright;

Endogenous Prizes in Security Contests

Abstract

In many environments, a contest protects an activity whose revenue finances the contest: policing funded by property taxes, platform security funded by usage fees, insurance solvency funded by premiums. The prize is endogenous to the protection level. This article characterises the resulting fixed-point problem. Under primitive conditions on cost convexity, demand regularity, and attack technology, the equilibrium set forms a complete lattice with a shutdown state, a stable highsecurity equilibrium, and an unstable tipping threshold. Interior equilibria appear and vanish via saddle-node bifurcation, and all comparative statics inherit a common amplification denominator that diverges at the fold. The welfare-maximising fee lies below the revenue-maximising fee when the security externality is moderate. A continuous-time extension nests the static equilibria as stationary points.

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selected citations
These citations are derived from selected sources.
This is an alternative to the "Influence" indicator, which also reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Citations provided by BIP!
popularity
This indicator reflects the "current" impact/attention (the "hype") of an article in the research community at large, based on the underlying citation network.
BIP!Popularity provided by BIP!
influence
This indicator reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Influence provided by BIP!
impulse
This indicator reflects the initial momentum of an article directly after its publication, based on the underlying citation network.
BIP!Impulse provided by BIP!
0
Average
Average
Average
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