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Re: What are the "externalities" of deploying a web service?
- From: Greg Hunt <greg@firmansyah.com>
- To: "Costello, Roger L." <costello@mitre.org>
- Date: Mon, 18 Jan 2010 07:29:05 +1100
Roger,Why do you want to know? This question is a bit like calculating lifecycle costs, you can keep pushing the boundary further out until the answer is so big and so diffuse that its difficult to tie it to any day-to-day concern. A contrived example, in order of increasing distance:
Cost of providing infrastructure Benefit of network effect Cost of increased visibility (attacks, regulatory attention) Increased marketing opportunities
Where do you draw the line? These four items are not necessarily attributable to the same one or two or three organisations.
Greg On Sat, Jan 16, 2010 at 11:40 PM, Costello, Roger L. <costello@mitre.org> wrote:
Hi Folks,
Consider these two examples:
1. When you drive, you pay for only gasoline and maintenance. You don't pay for the noise and pollutants that your car emits. You also don't pay for the added congestion and delays that you impose on other drivers.
2. When society is educated, it costs less to produce signs, ballots, tax forms, and other information tools. Literacy enables a democracy to function effectively, and higher education may stimulate scientific discoveries that improve the welfare of society. When you acquire an education, however, you do not get a check in the amount of savings your education will create for society.
The first example shows costs that you incur but are borne by others not directly involved.
The second example shows benefits that you incur but are accrued by others not directly involved.
Externalities are the costs or benefits of a market activity borne or accrued by someone who is not a direct party to the market transaction.
What are the externalities of deploying a web service?
Here's one: Suppose you deploy a web site and it is massively successful - lots of people visit your web site. You assume the costs of hiring land, labor, and capitol. But you don't bear the costs associated with the increased congestion and delays you impose on other users of the Internet.
Increased congestion and delays are externalities of deploying a web service. What are the other externalities?
Who pays for the externalities? For instance, who pays for the additional routers and DNS servers?
/Roger
P.S. The two examples and the definition of "externalities" come from the book: "Economics" by Boyes and Melvin.
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