Malware, Network Benefits, and Metcalfe’s Law

11 Pages Posted: 27 Feb 2021

See all articles by Marc Jegers

Marc Jegers

Vrije Universiteit Brussel (VUB) - Applied Economics Department

Leo Van Hove

Vrije Universiteit Brussel (VUB)

Date Written: December 16, 2019

Abstract

Arce (2018) presents a game-theoretic model in which users select and hackers target one of two IT platforms based upon the platforms’ network benefits and security levels. Unfortunately, in modelling the network benefits Arce misinterprets Metcalfe’s law. In particular, he assumes that the utility that a user obtains from a platform increases quadratically with the number of users, whereas Metcalfe’s law holds that utility increases linearly with network size. This note shows that with a linear utility function the distribution of hackers across the two platforms is less skewed. In addition, we extend upon Arce’s work by demonstrating that weaker network externalities reduce the set of conditions under which the market can be monopolised.

Keywords: malware, platform competition, network externalities, Metcalfe’s law

Suggested Citation

Jegers, Marc and Van Hove, Leo, Malware, Network Benefits, and Metcalfe’s Law (December 16, 2019). Available at SSRN: https://ssrn.com/abstract=3755450. or http://dx.doi.org/10.2139/ssrn.3755450

Marc Jegers

Vrije Universiteit Brussel (VUB) - Applied Economics Department ( email )

Pleinlaan 2
1040 Etterbeek
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Leo Van Hove (Contact Author)

Vrije Universiteit Brussel (VUB) ( email )

Department of Applied Economics (APEC)
Pleinlaan 5
Brussels, B-1050
Belgium
+32 2 614 84 49 (Phone)

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