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The Economics of Cloud Computing


  • Federico Etro


The paper examines the economic impact of the diffusion of a new technology as cloud computing. This will allow firms to rent computing power and storage from service providers and to pay on demand, with a profound impact on the cost structure of all the industries, turning some of the fixed costs into marginal costs of production. Such a change will have a substantial impact on the incentives to create new business, and through this, on investments and macroeconomic growth, job creation in all industries and job reallocation in the Information and Communications Technology (ICT) sector, and public finance accounts, through the direct impact on the public sector spending and the indirect one on the tax revenues. The paper investigates the consequences of the diffusion of cloud computing on market structures and competition, and tries to disentangle the above-mentioned aspects with a particular focus on a simulation run for the European economy.

Suggested Citation

  • Federico Etro, 2011. "The Economics of Cloud Computing," The IUP Journal of Managerial Economics, IUP Publications, vol. 0(2), pages 7-22, May.
  • Handle: RePEc:icf:icfjme:v:09:y:2011:i:2:p:7-22

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    Cited by:

    1. Anastassios GENTZOGLANIS, 2012. "Evolving Cloud Ecosystems: Risk, Competition and Regulation," Communications & Strategies, IDATE, Com&Strat dept., vol. 1(85), pages 87-107, 1st quart.
    2. Ergin Bayrak & John P. Conley & Simon Wilkie, 2011. "The Economics of Cloud Computing," Korean Economic Review, Korean Economic Association, vol. 27, pages 203-230.
    3. Shin, Dong-Hee & Yoon, Hongseok & Lee, Jaegil & Moon, Yohan & Kim, Namchul & Cho, Hoyeon, 2014. "User centric cloud service model in public sectors: Policy implications of cloud services," 20th ITS Biennial Conference, Rio de Janeiro 2014: The Net and the Internet - Emerging Markets and Policies 106853, International Telecommunications Society (ITS).
    4. Benyamin Aghhavani-Shajari, 2016. "Effect of cloud computing on interorganizational relationships in supply chain in France
      [Effets du Cloud computing sur les relations inter-organisationnelles dans la supply chain en France]
      ," Post-Print hal-01428837, HAL.
    5. Fershtman, Chaim & Gandal, Neil, 2012. "Migration to the Cloud Ecosystem: Ushering in a New Generation of Platform Competition," CEPR Discussion Papers 8907, C.E.P.R. Discussion Papers.
    6. Chaim FERSHTMAN & Neil GANDAL, 2012. "Migration to the Cloud Ecosystem: Ushering in a New Generation of Platform Competition," Communications & Strategies, IDATE, Com&Strat dept., vol. 1(85), pages 109-123, 1st quart.
    7. Willcocks, Leslie P. & Venters, Will & Whitley, Edgar A., 2013. "Cloud sourcing and innovation: slow train coming? A composite research study," LSE Research Online Documents on Economics 54848, London School of Economics and Political Science, LSE Library.
    8. Andrea RENDA, 2012. "Competition, Neutrality and Diversity in the Cloud," Communications & Strategies, IDATE, Com&Strat dept., vol. 1(85), pages 23-44, 1st quart.
    9. Prüfer, J.O., 2014. "Trusting Privacy in the Cloud," Discussion Paper 2014-047, Tilburg University, Tilburg Law and Economic Center.
    10. Rafael Accorsi & Lutz Lowis & Yoshinori Sato, 2011. "Automated Certification for Compliant Cloud-based Business Processes," Business & Information Systems Engineering: The International Journal of WIRTSCHAFTSINFORMATIK, Springer;Gesellschaft für Informatik e.V. (GI), vol. 3(3), pages 145-154, June.
    11. Nicola Dimitri & Ramona Apostol, 2016. "Pricing Cloud Computing Services," Working Papers 2016/13, Maastricht School of Management.

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