Toward a Monopoly Botnet Market

Zhen Li1 and Qi Liao2 1Department of Economics and Management, Albion College, Albion, Michigan, USA 2Department of Computer Science, Central Michigan University, Mount Pleasant, Michigan, USA ABSTRACT Economics play an increasingly important role in fighting cyber crimes. While the arms race against botnet problems has achieved limited success, we propose an approach attacking botnets through affecting a botnet market structure. The characteristics of the present underground botnet market suggest that it functions effectively as perfectly competitive. Competitive markets are usually efficient. We argue that less competition in the botnet market is actually preferred. Our economic analysis suggests that monopoly reduces the overall market output of botnets. Using a model of market structure evolution, we identify key forces that affect the botnet market structure and propose possible ways such as defaming botnet entrants to reduce competition, which ultimately reduce the size and output of the botnet market. The analysis provides useful insight to botnet defenders as a guidance on an efficient allocation of defending resources by attacking more on new entrants to the botnet market relative to the existing botmasters.