[info] transaction and coordination costs, and centralization of software

[Eugen Leitl]

----- Forwarded message from Kragen Javier Sitaker <kragen at pobox.com> -----

From: Kragen Javier Sitaker <kragen at pobox.com>
Date: Sat, 24 Nov 2007 00:09:25 -0500
To: kragen-tol at lists.canonical.org
Cc: 
Subject: transaction and coordination costs, and centralization of software
User-Agent: Mutt/1.5.9i

Coase argues that firms grow as long as the costs of organizing
transactions outside the firm, using the market pricing mechanism, are
smaller than the costs of organizing those same transactions inside the
firm, using management.

Today we are seeing a trend toward running more and more of our
networked applications inside of Google's data center.  (Or Amazon's, or
whatever.)  Perhaps this happens because the costs of organizing
exchanges of information between administrative domains on the internet
--- not necessarily using a market pricing mechanism, but not involving
complete mutual trust --- are nonzero, and the costs of organizing those
same exchanges inside of a single administrative domain are sometimes
smaller.

Suppose this is the case.  What can we predict?  What kinds of
technological or social developments might increase the costs (or
decrease the efficacy) of exchanges of information between
administrative domains?  Spam is an obvious example; so is software
insecurity in general.  Proprietary systems software, or systems
software that is not designed for internet scale, could also have such
effects.

What kinds of technological or social developments might decrease the
costs or increase the efficacy of these exchanges of information?
Better systems security, better decentralized source control systems (so
that software improvements can be shared more readily between
administrative domains, standardized protocols covering a wider range of
the needed functionality.

But the explanation for these trends might not be that inter-domain
costs are going up; it might also be that intra-domain costs are going
down.  Things like the Google Filesystem, Mapreduce, rsync, backuppc,
Xen, VMWare, and the like, may allow larger systems to be run by fewer
sysadmins.

(Riffs on a discussion tonight with Rohit Khare, who's visiting us here
in Argentina.)

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Eugen* Leitl <a href="http://leitl.org">leitl</a> http://leitl.org
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