Dynamic Pricing of Applications in Cloud Marketplaces using Game Theory

TL;DR

This paper models cloud marketplace pricing as a game to develop dynamic strategies, proving the existence and uniqueness of Nash equilibrium to optimize provider profits in competitive environments.

Contribution

It introduces a quantitative game-theoretic model for cloud marketplace pricing, ensuring the existence and uniqueness of Nash equilibrium for dynamic pricing strategies.

Findings

Existence of Nash equilibrium in the proposed model

Uniqueness of the Nash equilibrium

Enhanced profit strategies for providers

Abstract

The competitive nature of Cloud marketplaces as new concerns in delivery of services makes the pricing policies a crucial task for firms. so that, pricing strategies has recently attracted many researchers. Since game theory can handle such competing well this concern is addressed by designing a normal form game between providers in current research. A committee is considered in which providers register for improving their competition based pricing policies. The functionality of game theory is applied to design dynamic pricing policies. The usage of the committee makes the game a complete information one, in which each player is aware of every others payoff functions. The players enhance their pricing policies to maximize their profits. The contribution of this paper is the quantitative modeling of Cloud marketplaces in form of a game to provide novel dynamic pricing strategies; the model is validated by proving the existence and the uniqueness of Nash equilibrium of the game.