Competition, complementarity and service level guarantee in Web services

Network and processing overhead associated with web services is a significant challenge to its performance. As a result, web service providers often announce a service level agreement. This ensures that consumers, who pay for the service, can get the service at a given quality level. In this paper, we study the competition between two providers offering functionally the same web services, where there is a monopoly service provider who offers a service that is complementary to their services. Each provider needs to decide a service level (L or H) he/she would offer and a corresponding price for the selected service level to meet the QoS guarantee. We combine modeling constructs from game theory and queuing theory to propose a model that can provide useful insights to service providers about pricing and general competitive strategies.