Espionage and the optimal standard of the Customs-Trade Partnership against Terrorism (C-TPAT) program in maritime security
Aniruddha Bagchi and Jomon A. Paul
European Journal of Operational Research, Vol. 262, No. 1 (October 2017), pp. 89-107
Overview
We examine the effect of espionage on optimal design of the C-TPAT (Customs Trade Partnership Against Terrorism), a trusted-trader program administered by US Customs and Border Protection (CBP) on behalf of the Department of Homeland Security. A major CBP concern is that one of the many containers passing through ports can be used to import a “dirty” bomb. Inspecting every container would be expensive and slow down trade. C-TPAT was introduced to manage this problem. Firms that sign up make some expenditures to secure their supply chain in exchange for priority processing of their goods at the port of entry. We examine how other factors, such as the quality of information about terrorist groups, affects C-TPAT efficacy. First, we predict that terrorist groups are likely to smuggle weapons infrequently but to focus on highly lethal weapons. Second, if the CBP requires a higher standard of supply-chain security from trusted traders, we identify circumstances that will decrease or increase firms’ propensity to sign up. Third, we demonstrate that, although counterintuitive, social welfare may increase in response to an increase in the opportunity cost of time.
10 | Journal Publication - Distinguished Journal
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