Abstract

Could computing service providers have to ensure that the service applications, cloud software, and the physical location of the cloud are secure. Furthermore, providers need to ensure that the service is secure on the client’s side of the system. To examine the client side security level we build economic models that consider the tradeoffs between system usability and client side security restrictions. Our mixed market model is based on firms with different objectives (i.e., social welfare maximizing vs. profit maximizing). Under the mixed market model, we show that it is desirable to maintain adequate client side security differentiation. The equilibrium price charged by the welfare maximizing firm for its cloud computing service is always equal to that charged by the profit maximizing firm. The result shows that socially optimal solution is achieved when the welfare maximizing firm is the market leader.

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