A provider naturally wishes to set a higher price to get a higher revenue; however, in doing so, it also bears the risk of discouraging demand in the future. On the other hand, they also look for the means to cooperate with other providers to reduce the operation cost and therefore improve their final revenue. In this abstract, we study both problems of the current cloud market: competition and cooperation among providers. The competition among providers leads to the evolution of the market and dynamic resource prices over time. On the other hand, cloud providers may cooperate with each other to improve their final revenue. Based on a Service Level Agreement, a provider can outsource its users resource requests to its partner to reduce the operation cost and thereby improve the final revenue. This leads to the problem of determining the cooperating parties in a cooperative environment. This abstract tackles these two issues of the current cloud market. First, we solve the problem of competition among providers and propose a dynamic price policy. We employ a discrete choice model to describe the user’s choice behavior based on his obtained benefit value. The choice model is used to derive the probability of a user choosing to be served by a certain provider. The competition among providers is formulated as a non-cooperative stochastic game where the players are providers who act by proposing the price policy simultaneously. The game is modelled as a Markov Decision Process whose solution is a Markov Perfect Equilibrium. Then, we address the cooperation among providers by presenting a novel algorithm for determining a cooperation strategy that tells providers whether to satisfy users’ resource requests locally or outsource them to a certain provider. The algorithm yields the optimal cooperation structure from which no provider unilaterally deviates to gain more revenue. Numerical simulations are carried out to evaluate the performance of the proposed model.
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