\section{Economic Model}
\label{sec:Economy}

The SuperWeb architecture makes computational resources a freely
tradeable commodity that can be captured by a microeconomic model of
supply and demand.  Like other commodity exchanges, fluctuations in
supply and demand result in a changed costs for the services provided.
As an example, suppose the SuperWeb is serving a number of
supercomputing researchers.  Just before a supercomputing conference
deadline, the demand for resources is likely to grow. As a result, the
cost of requesting a hundred CPU hours will increase, as will the
demand to have results returned in a timely fashion.  Conversely,
after the deadline has passed, the cost of such resources will drop.
%
When the host registers its computational resources with a broker, and
the broker can give it tasks to execute, the broker and the host
establish a \emph{contract}.
  Part of this contract is the
\emph{quality of service} which the host promises. This quality might
be measured in reliability promises or time and availability
constraints.
%
% Depending on the value of its services, the client
% receives certain credits in exchange.
%
The contract also specifies what the host will receive in exchange for its
services and what is the penalty for the host in case it fails to
complete the task properly.
%

A similar approach has been suggested by the Mariposa project
and is discussed in detail in \cite{mariposa}. Mariposa is a 
WAN distributed database management system that 
bases its query and storage optimization on a microeconomic model.
Mariposa's model includes brokers, advertising  and bidding for
requests.

SuperWeb's model will most likely be based on currency-based trading.
A micro-currency as described in \cite{micro1,micro2} might
be used as the cost of a short computation is very small.
A currency-based SuperWeb economy strikingly resembles the economy of
the electric utility industry. The supercomputer centers play the part
of power plant operators, whereas network computer owners stand for
pure consumers, and private hosts for consumers with a wind or solar
powered generator feeding surplus power into the power grid.

Alternatively, it may be more convenient to view broker economics
in terms of barter.  Depending on what the broker has to offer,
services rendered might be paid for with free CPU time (e.g.,~to run
another supercomputing application), information access (e.g.,~free
access to air-travel information systems), free backups, cheap access
to the Internet, access to software licenses, etc.  A user can trade
extra CPU time now for CPU tonight.  This model would provide the
incentive to use the system; since most machines spend a large
percentage of their time idle, many people may be willing to trade
this ``free time'' for something useful.  Barter works well if we have
only a few commodities to trade (e.g., CPU time, disk space,
bandwidth). Note that the perceived value of resources might be higher
than the actual value (e.g., CPU time for free games).
%  On the other hand, a micro-currency makes
% the broker model more defined, and we assume such a currency.

An economic model based on the broker needs to incorporate more than
just the cost of the requested computation and expected quality of
service.  There are also the ``middle-man'' issues such as the broker's
commission, and the cost to ship the computation.  The latter
overhead could have a severe impact on some types of service: the cost
to transmit a large program, large data input, and large data output
(e.g., a graphics program that processes large images) might be
prohibitive: it then would be cheaper to perform the computation
locally.  The extra cost not only consists of the extra time involved
to send the data, but also the direct cost of using the network,
assuming that is the only way to access the host computer. Currently,
this cost is often hidden from users in academia, since free
Internet connections are provided. Unsubsidized users are charged a
hefty price by the telecommunication companies, although bandwidth
continues to increase and prices to drop.
% For instance,
% telecommunication companies are currently experimenting with
% long-distance fibres carrying several Terabits/s \cite{terabit}.

An interesting aspect of the anticipated cyber-economy is the
extremely high depreciation of computer hardware. Since our computing
infrastructure facilitates renting of resources, it might be better to
rent half of a computer on a nearby computer center than to buy a
whole computer now, and leave most of its CPU cycles unused. Service
centers will have to continuously adapt prices to remain competitive.
One could also envision trading derivatives, such as CPU time futures.




