A Game-Theoretic Model for Dynamic Pricing and Competition among Cloud Providers

With many providers in today´s cloud market, it is crucial for each provider to offer an optimal price policy which maximizes the final revenue and improves the competitive advantage. The competition among providers leads to the evolution of the market and dynamic resource prices over time. In this paper, we address the competition among cloud providers and propose a dynamic pricing scheme. We employ a discrete choice model to describe the user´s behavior. The model is used to derive the probability of a user choosing to be served by a certain provider. The competition among cloud 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. Numerical simulations are carried out to evaluate the performance of the proposed model.