The Economics and Political Economy of Transportation Security

The Economics and Political Economy of Transportation Security

Transport Economics, Management and Policy series

Kenneth Button

In this clear and observant book, Kenneth Button provides an overview of the economics and political economy of transport security, considering its policy from an economic perspective. His analysis applies micro-economic theory to transport issues, supporting and enhancing the larger framework of our knowledge about personal, industrial, and national security.

Chapter 4: Links between market structure and security

Kenneth Button

Subjects: economics and finance, transport, environment, transport, politics and public policy, public policy, terrorism and security, urban and regional studies, transport


Shop for security over happiness and we buy it at that price Richard Bach. Adopting the neoclassical microeconomic reasoning that underlies the thinking of people like Gary Becker, security can be seen as a service that can be bought and sold like most other goods or services. It may also be considered from a slightly different economic perspective, following the broad ideas of Kelvin Lancaster (1966), as an attribute of a good or service, whereby individuals treat a service as bundles of attributes, selecting services to consume according to the bundles that maximize their relative utilities including the security that they bring. But from either perspective, there is a cost attached to providing security, as well as benefits from its purchase, and thus people can bargain with suppliers over the nature, the amount and the cost of the security to be provided. Put simply, the shotgun guard on the stagecoach in the old west was a clear cost to the traveler, but as a deterrent to a hold-up it provided a benefit. In turn, the guard’s pay reflected the minimum net benefit to the stagecoach company of employing him or her, with this, in turn, being a reflection of the travelers’ willingness-to-pay for protection. In this sense, security is an input into the value chain just like any other input, and the users of security services, as with any other input, want to ensure that they get value for their money; why buy it otherwise?

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