The linear and second-order theories of ion beam-density gradient drift instabilities on the outer edge of the inhomogeneous plasma sheet boundary layer (PSBL), with warm current sheet ion beams and cold ionospheric ion beams and cold ionospheric ion beams drifting in opposite directions, are examined. It is shown that combined interactions of ion beams and plasma density gradient drifts can excite electrostatic ion beam-density gradient drift instabilities. These instabilities combine to form the broadband maximum growth rate spectrum with the peak growth rate ~0.34 &ohgr;lh at the obliquely propagating low frequency, where &ohgr;lh is the lower hybrid frequency. These linear results can be used to explain the observed broadband electrostatic noise on the outer edge of the PSBL. The calculations for the second-order heating rate show that three particle components in the model may be heated by electrostatic waves which result from ion beam-density gradient drift instabilities. The second-order heating rates for the cold ionospheric ion beams are the highest. The heating rate profiles with respect to the ambient magnetic field for each component are anisotropic and similar to the maximum growth rate profiles. The peak heating rate occurs at the obliquely propagating low frequency which corresponds to the peak growth rate. The second-order heating considered here is due to resonance broadening of weak resonant components. These results may be used to understand trnasport processes on the outer edge of the PSBL. ¿ American Geophysical Union 1991