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Positive Externality, Increasing Returns, and the Rise in Cybercrimes


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The meteoric rise in cybercrime has been an issue of pressing concern to our society. Internet-related frauds accounted for 46% of consumer complaints made to the Federal Trade Commission (FTC) in 2005. Total losses of Internet fraud victims reporting to FTC increased from $205 million in 2003 to $336 million in 2005. This paper offers an economic analysis to explain cybercrimes' escalation.

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