A Market-Based Analysis of Bidding Strategy Between Web Service Providers and Users

Abstract

In the cloud environment, there exist multiple providers offering the same or similar web service, and multiple users requiring the same web service. There exist competition among web service providers and users. In this paper, we investigate the interacting strategy between web service providers and users based on the double auction mechanism. In this setting, web service is traded as commodity between service providers (sellers) and users (buyers). Web service providers and users interact with each other, and they need to submit effective offers for the traded web service. We then use game theory to analyze how web service providers and users bid in different trading environments with different budget constraints. We find that if one-unit service is allowed in the marketplace, service users shade (i.e. bid less than their types) their bids less and service providers shade (i.e. ask more than their types) their asks more when the budget increases. If multi-unit services are allowed in the marketplace, when the service providers’ budgets increase, service providers shade their asks less and service users shade more. In addition, more service users are willing choose to enter the market. When the service users’ budget increases, more and more users offer two-units services to obtain more profits. Our results will provide guidance for the efficient design of bidding algorithms between web service providers and users.