A business that can’t lose: Investing in attacks against the Colombian power grid

In 2005 a company in charge of repairing electric transmission towers made a deal with guerrilla militants to demolish the towers. This company thrived, because the attacks were attributed to guerrilla groups, who commit these attacks often. However, the number of attacks increased significantly, ra...

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Bibliographic Details
Published inInternational journal of critical infrastructure protection Vol. 26; p. 100303
Main Authors Barreto, Carlos, Cardenas, Alvaro A., Holmes, Jennifer, Palao, Agustin, Restrepo, Juan Carlos
Format Journal Article
LanguageEnglish
Published Elsevier B.V 01.09.2019
Subjects
Contracts
Economics
Game theory
Mechanism design
Power systems
Security transmission lines
Economics
Security transmission lines
Power systems
Game theory
Mechanism design
Contracts
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Summary:In 2005 a company in charge of repairing electric transmission towers made a deal with guerrilla militants to demolish the towers. This company thrived, because the attacks were attributed to guerrilla groups, who commit these attacks often. However, the number of attacks increased significantly, raising alarms and leading to the discovery of the plot. We model this situation as a game between contractors and the power transmission company, and show how misaligned incentives enabled contractors to profit by colluding with guerrilla groups. We also analyze how to modify the contractual policies reducing the incentives to collude with guerrillas. In particular, the transmission company can prevent attacks by creating competition and exploiting market inefficiencies.
ISSN:1874-5482
2212-2087
DOI:10.1016/j.ijcip.2019.05.006