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Vertical Integration Of Computing Facilities, A Transaction Cost Approach, Michael Piptea, Dan Pieptea

Journal of International Information Management

This paper develops a generalized model for computing capacity by identifying the main activities in a computer facility as formal transactions. The formal transactions carried out in a computing environment are characterized along two dimensions: freqency of occurrence and idiosyncrasy of assets. Vfe make recommendations as to how these formal transactons should be executed - across markets, internally or using intermediate forms of governance. It is shown that transactions in a computing facility fall into one of three categories: procurement of assets, maintenance and modification of assets, and collection, storage and processing of data into information. Formal transactions in a …