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Cloud Goliath Versus a Federation of Cloud Davids: Survey of Economic Theories on Cloud Federation

Listed author(s):
  • Kibae Kim

    ()

    (College of Engineering, Seoul National University)

  • Songhee Kang

    ()

    (College of Engineering, Seoul National University)

  • Jorn Altmann

    ()

    (College of Engineering, Seoul National University)

Cloud computing, which can be described as a technology for provisioning computing infrastructure as a service, runtime platform as a service, and software as a service, is considered as a keystone for innovation in the IT area. However, a limiting factor to innovation through cloud computing could be the economies of scale and network externalities that give more benefits to larger cloud providers. Due to the economies of scale and network externalities in an oligopolistic environment, a giant cloud provider can offer resources at lower cost than smaller providers. To overcome the disadvantage of small clouds, some research proposes architectures, in which small clouds can federate through common virtual interfaces. Therefore, academy and industry ask whether the federation of small cloud providers is economically feasible and can compete with a giant cloud provider. However, it is hard to solve those problems because the specifications of a cloud federation and the conditions of cloud market are unclear. To fill this gap, in this paper, we survey the conceptual background of cloud computing and the federation of small cloud providers. The results of this paper are expected to guide how to define the economic problems on cloud federation and provide constraints to the problems.

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File URL: ftp://147.46.237.98/DP-117.pdf
File Function: First version, 2014
Download Restriction: no

Paper provided by Seoul National University; Technology Management, Economics, and Policy Program (TEMEP) in its series TEMEP Discussion Papers with number 2014117.

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Length: 18 pages
Date of creation: Jul 2014
Date of revision: Jul 2014
Publication status: Published in Proceedings of the 11th International Conference on Economics of Grids, Clouds, Systems, and Services (GECON 2014).
Handle: RePEc:snv:dp2009:2014117
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  2. Netsanet Haile & Jorn Altmann, 2012. "Value Creation in IT Service Platforms through Two-Sided Network Effects," TEMEP Discussion Papers 201297, Seoul National University; Technology Management, Economics, and Policy Program (TEMEP), revised Nov 2012.
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  11. Ivan Breskovic & Ivona Brandic & Jorn Altmann, 2013. "Maximizing Liquidity in Cloud Markets through Standardization of Computational Resources," TEMEP Discussion Papers 2013100, Seoul National University; Technology Management, Economics, and Policy Program (TEMEP), revised Feb 2013.
  12. David Evans & Richard Schmalensee, 2007. "The Industrial Organization of Markets with Two-Sided Platforms," CPI Journal, Competition Policy International, vol. 3.
  13. Juthasit Rohitratana & Jorn Altmann, 2010. "Agent-Based Simulations of the Software Market under Different Pricing Schemes for Software-as-a-Service and Perpetual Software," TEMEP Discussion Papers 201064, Seoul National University; Technology Management, Economics, and Policy Program (TEMEP), revised Jul 2010.
  14. Sodam Baek & Kibae Kim & Jorn Altmann, 2014. "Role of Platform Providers in Service Networks: The Case of Salesforce.com AppExchange," TEMEP Discussion Papers 2014112, Seoul National University; Technology Management, Economics, and Policy Program (TEMEP), revised May 2014.
  15. Katz, Michael L & Shapiro, Carl, 1985. "Network Externalities, Competition, and Compatibility," American Economic Review, American Economic Association, vol. 75(3), pages 424-440, June.
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  18. Ivan Breskovic & Jorn Altmann & Ivona Brandic, 2012. "Creating Standardized Products for Electronic Markets," TEMEP Discussion Papers 201296, Seoul National University; Technology Management, Economics, and Policy Program (TEMEP), revised Sep 2012.
  19. Mohammad Mahdi Kashef & Jorn Altmann, 2011. "A Cost Model for Hybrid Clouds," TEMEP Discussion Papers 201182, Seoul National University; Technology Management, Economics, and Policy Program (TEMEP), revised Dec 2011.
  20. Ashraf Bany Mohammed & Jorn Altmann & Junseok Hwang, 2010. "Cloud Computing Value Chains Understanding Businesses and Value Creation in the Cloud," TEMEP Discussion Papers 201061, Seoul National University; Technology Management, Economics, and Policy Program (TEMEP), revised Jun 2010.
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