Computational intermediation and the evolution of computation as a commodity

Antony Davies

Applied Economics, 2004, vol. 36, issue 11, 1131-1142

Abstract: The consumer who purchases computational power ultimately purchases a reduction in the time interval between the initiation and the completion of work. This paper looks at computation as a commodity and the nascent industry of computational intermediation, and proposes a model for the market for computational power as distinct from the market for computers. Some interesting results emerge. The model implies that the demand for computation is discontinuous and that there is a lower limit to the quantity of computation consumers will demand that is independent of the price of power. The model identifies a range of computational powers that could be supplied by computational intermediaries but which will not be supplied by computer manufacturers, and suggests a model for pricing computation.

Date: 2004
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DOI: 10.1080/0003684042000247334

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