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The Economics of Cloud Computing

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  • Federico Etro

Abstract

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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    Citations

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    Cited by:

    1. Elena Toader & Bogdan Narcis Firtescu & Angela Roman & Sorin Gabriel Anton, 2018. "Impact of Information and Communication Technology Infrastructure on Economic Growth: An Empirical Assessment for the EU Countries," Sustainability, MDPI, vol. 10(10), pages 1-22, October.
    2. Candel Haug, Katharina & Kretschmer, Tobias & Strobel, Thomas, 2016. "Cloud adaptiveness within industry sectors – Measurement and observations," Telecommunications Policy, Elsevier, vol. 40(4), pages 291-306.
    3. Lichao Lin & Adrian Cheung, 2022. "Cloud economy and its relationship with China’s economy—a capital market-based approach," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 8(1), pages 1-22, December.
    4. Anastassios GENTZOGLANIS, 2012. "Evolving Cloud Ecosystems: Risk, Competition and Regulation," Communications & Strategies, IDATE, Com&Strat dept., vol. 1(85), pages 87-107, 1st quart.
    5. Ergin Bayrak & John P. Conley & Simon Wilkie, 2011. "The Economics of Cloud Computing," Korean Economic Review, Korean Economic Association, vol. 27, pages 203-230.
    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. 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).
    8. Zhenghua Li & Nianxin Wang & Shilun Ge, 2022. "Exploitative or explorative innovation? An event study of cloud computing business value," Electronic Commerce Research, Springer, vol. 22(4), pages 1467-1490, December.
    9. Gupta, Prashant & Seetharaman, A. & Raj, John Rudolph, 2013. "The usage and adoption of cloud computing by small and medium businesses," International Journal of Information Management, Elsevier, vol. 33(5), pages 861-874.
    10. Sylvester N. Ogbueghu & Anuli Regina Ogbuagu & Amos Nnaemeka Amedu & Daniel Munachiso Eze & Augustine Igwe Robert & Ifeoma Euphemia Opara & Benedict Ejiofor Ugwuanyi & Chukwuma Ogbonnaya Chukwu & Laza, 2020. "Utilization of Cloud Computing in Economics Education and Health Economics: A Valuable Resource," Global Journal of Health Science, Canadian Center of Science and Education, vol. 12(5), pages 117-117, May.
    11. 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.
    12. Diane Coyle & David Nguyen, 2018. "Cloud Computing and National Accounting," Economic Statistics Centre of Excellence (ESCoE) Discussion Papers ESCoE DP-2018-19, Economic Statistics Centre of Excellence (ESCoE).
    13. Doose, Anna Maria & Monti, Alessandro & Schäfer, Ralf G., 2011. "Mittelfristige Marktpotenziale im Kontext der Nachfrage nach hochbitratigen Breitbandanschlüssen in Deutschland," WIK Discussion Papers 358, WIK Wissenschaftliches Institut für Infrastruktur und Kommunikationsdienste GmbH.
    14. Marlon Graf & Jakub P. Hlavka & Bonnie L. Triezenberg, 2016. "A Change is in the Air Emerging Challenges for the Cloud Computing Industry," Working Papers WR-1144, RAND Corporation.
    15. C. Madhavaiah & Irfan Bashir & Syed Irfan Shafi, 2012. "Defining Cloud Computing in Business Perspective: A Review of Research," Vision, , vol. 16(3), pages 163-173, September.
    16. 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.
    17. Andrea RENDA, 2012. "Competition, Neutrality and Diversity in the Cloud," Communications & Strategies, IDATE, Com&Strat dept., vol. 1(85), pages 23-44, 1st quart.
    18. Ajoy Ketan Sarangi & Rudra Prakash Pradhan, 2020. "ICT infrastructure and economic growth: a critical assessment and some policy implications," DECISION: Official Journal of the Indian Institute of Management Calcutta, Springer;Indian Institute of Management Calcutta, vol. 47(4), pages 363-383, December.
    19. Fayq Al Akayleh, 2018. "Impact of Technological Progress on Economic Growth and Employment: A Case Study of Saudi Arabia," The Journal of Social Sciences Research, Academic Research Publishing Group, vol. 4(12), pages 606-617, 12-2018.
    20. Elena PUICA, 2020. "Cloud Computing in Supply Chain Management and Economic, Environmental and Social Impact Analysis," Informatica Economica, Academy of Economic Studies - Bucharest, Romania, vol. 24(4), pages 41-54.
    21. Liz Price & Jim Shutt & Jessica Sellick, 2018. "Supporting rural Small and Medium-sized Enterprises to take up broadband-enabled technology: What works?," Local Economy, London South Bank University, vol. 33(5), pages 515-536, August.
    22. Prüfer, Jens, 2018. "Trusting privacy in the cloud," Information Economics and Policy, Elsevier, vol. 45(C), pages 52-67.
    23. 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.
    24. Josep Domenech & Raul Peña-Ortiz & Jose A. Gil & Ana Pont, 2016. "A Methodology for Economic Evaluation of Cloud-Based Web Applications," International Journal of Information Technology & Decision Making (IJITDM), World Scientific Publishing Co. Pte. Ltd., vol. 15(06), pages 1555-1578, November.
    25. Nicola Dimitri & Ramona Apostol, 2016. "Pricing Cloud Computing Services," Working Papers 2016/13, Maastricht School of Management.

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