Pricing strategies of an oligopolist in federated cloud markets

Abstract

Abstract In this paper, we study how an oligopolist influences the coalition structure in federated cloud markets. Specifically, we use cooperative game theory to model the circumstances under which a cloud provider prefers to join a cloud federation vis-a-vis consider taking a price offer made by an oligopolist. We consider two price offering strategies for an oligopolist: non-adaptive and adaptive. In non-adaptive strategy, an oligopolist makes a price offer to all the cloud providers simultaneously. It can be noted that the oligopolist can buy-out all the cloud providers by making a price offer which is equal to a core allocation and the total price offer made by the oligopolist is equal to the value of the grand coalition. In adaptive strategy, the oligopolist approaches the cloud providers one after another in a sequential manner. We show that by using the adaptive strategy, the oligopolist can buy-out all the cloud providers at a total price offer which is less than that of the non-adaptive strategy.

Keywords

• Federated clouds
• Oligopoly
• Linear production games