Skip to main content
SpringerLink
Log in
Book cover

International Conference on Cloud Computing and Services Science

CLOSER 2014: Cloud Computing and Services Sciences pp 47–62Cite as

An Economic Model for Utilizing Cloud Computing Resources via Pricing Elasticity of Demand and Supply

  • Conference paper
  • First Online:

  • 533 Accesses

Part of the book series: Communications in Computer and Information Science ((CCIS,volume 512))

Abstract

In this study, we elaborate two economic variables which have direct impact on prospective aspects of trading like Cloud resource allocation over future demands. These variables are Pricing Elasticity of Demand (PEoD) and Pricing Elasticity of Provisioning (PEoP). To leverage the pricing elasticity of upcoming demand and supply, we employ financial option theory as a method to alleviate the risk in resource provisioning over future demands. Our approach finds the optimal option price of the federated resource in the Cloud to come to an equilibrium between PEoD and PEoP. The asset equilibrium price occurs when the supply resource pool matches the aggregate demand indicating an optimal resource utilization. This study proposes a novel Cloud Asset Pricing Tree (CAPT) model that finds the optimal premium price of the Cloud federation options efficiently. The CAPT enables cloud service providers to make proper decisions when to trade options in advance and when to exercise them to achieve more economies of scale. Our empirical evidences suggest that utilizing the CAPT model, exploits the Cloud federation market as an opportunity for more resource utilization and future capacity planning.

This is a preview of subscription content, log in via an institution.

Notes

  1. 1.

    http://aws.amazon.com/ec2/pricing/.

  2. 2.

    http://en.wikipedia.org/wiki/Option_(finance).

  3. 3.

    Amazon EC2 Small Instance: 1.7 GiB of memory, 1 EC2 Compute Unit, 160 GB of local instance storage, 32-bit or 64-bit platform.

  4. 4.

    https://github.com/tlossen/cloudexchange.org.

  5. 5.

    http://aws.amazon.com/agreement/.

References

  1. Calheiros, R.N., Ranjan, R., Beloglazov, A., De Rose, A.F., Buyya, R.: Cloudsim: a toolkit for modeling and simulation of cloud computing environments and evaluation of resource provisioning algorithms. Softw. Pract. Exper. 41(1), 23–50 (2011). http://dx.doi.org/10.1002/spe.995

    Article  Google Scholar 

  2. Cox, J.C., Ross, S.A., Rubinstein, M.: Option pricing: a simplified approach. J. Financ. Econ. 7(3), 229–263 (1979)

    Article  MathSciNet  MATH  Google Scholar 

  3. Shyr Dai, T., dauh Lyuu, Y.: The bino-trinomial tree: a simple model for efficient and accurate option pricing. J. Deriv. 17(4), 7–24 (2010)

    Article  Google Scholar 

  4. Dai, T.-S., Lyuu, Y.-D.: An efficient, and fast convergent algorithm for barrier options. In: Kao, M.-Y., Li, X.-Y. (eds.) AAIM 2007. LNCS, vol. 4508, pp. 251–261. Springer, Heidelberg (2007)

    Chapter  MATH  Google Scholar 

  5. Dustdar, S., Guo, Y., Satzger, B., Truong, H.L.: Principles of elastic processes. Internet Comput. IEEE 15(5), 66–71 (2011)

    Article  Google Scholar 

  6. Gomes, E.R., Vo, Q.B., Kowalczyk, R.: Pure exchange markets for resource sharing in federated clouds. Concurr. Comput. Pract. Exper. 24(9), 977–991 (2012). http://dx.doi.org/10.1002/cpe.1659

    Article  Google Scholar 

  7. Kurze, T., Klems, M., Bermbach, D., Lenk, A., Tai, S., Kunze, M.: Cloud federation. In: Computing (c), pp. 32–38 (2011)

    Google Scholar 

  8. Mankiw, N.G.: Elasticity and its applications. In: Principles of Microeconomics, 6th edn, pp. 89–109. Harvard University (2012)

    Google Scholar 

  9. Raj, G.: An efficient broker cloud management system. In: Proceedings of the International Conference on Advances in Computing and Artificial Intelligence, ACAI 2011, pp. 72–76. ACM, New York (2011). http://doi.acm.org/10.1145/2007052.2007067

  10. Rogers, O., Cliff, D.: A financial brokerage model for cloud computing. J. Cloud Comput. 1(1), 1–12 (2012). http://dx.doi.org/10.1186/2192-113X-1-2

    Article  Google Scholar 

  11. Samaan, N.: A novel economic sharing model in a federation of selfish cloud providers (2013)

    Google Scholar 

  12. Sharma, B., Thulasiram, R., Thulasiraman, P., Garg, S., Buyya, R.: Pricing cloud compute commodities: a novel financial economic model. In: 2012 12th IEEE/ACM International Symposium on Cluster, Cloud and Grid Computing (CCGrid), pp. 451–457 (2012)

    Google Scholar 

  13. Toosi, A., Thulasiram, R., Buyya, R.: Financial option market model for federated cloud environments. In: 2012 IEEE Fifth International Conference on Utility and Cloud Computing (UCC), pp. 3–12 (2012)

    Google Scholar 

  14. Villegas, D., Bobroff, N., Rodero, I., Delgado, J., Liu, Y., Devarakonda, A., Fong, L., Masoud Sadjadi, S., Parashar, M.: Cloud federation in a layered service model. J. Comput. Syst. Sci. 78(5), 1330–1344 (2012). http://dx.doi.org/10.1016/j.jcss.2011.12.017

    Article  Google Scholar 

  15. Zhang, Z., Zhang, X.: An economic model for the evaluation of the economic value of cloud computing federation. In: Zhang, Y. (ed.) Future Wireless Networks and Information Systems. LNEE, vol. 141, pp. 571–577. Springer, Heidelberg (2012)

    Chapter  Google Scholar 

  16. Zhao, H., Yu, Z., Tiwari, S., Mao, X., Lee, K., Wolinsky, D., Li, X., Figueiredo, R.: Cloudbay: enabling an online resource market place for open clouds. In: 2012 IEEE Fifth International Conference on Utility and Cloud Computing (UCC), pp. 135–142 (2012)

    Google Scholar 

Download references

Acknowledgements

The research leading to these results is sponsored by the Doctoral College of Adaptive Distributed Systems at the Vienna University of Technology as well as the Pacific Controls Cloud Computing Lab (PC3L) (http://pc3l.infosys.tuwien.ac.at/), a joint lab between Pacific Controls, Dubai, and the Distributed Systems Group at the Vienna University of Technology.

Author information

Authors and Affiliations

  1. Distributed Systems Group, Technical University of Vienna, Vienna, Austria

    Soheil Qanbari, Fei Li & Schahram Dustdar

  2. Institute of Finance, National Chiao-Tung University, Hsinchu, Taiwan

    Tian-Shyr Dai

Authors
  1. Soheil Qanbari
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Fei Li
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Schahram Dustdar
    View author publications

    You can also search for this author in PubMed Google Scholar

  4. Tian-Shyr Dai
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Soheil Qanbari .

Editor information

Editors and Affiliations

  1. School of Computing, Dublin City University, Dublin 9, Ireland

    Markus Helfert

  2. LIP / Inria Ecole normale supérieure de Lyon, Lyon, France

    Frédéric Desprez

  3. Dell, ROUND ROCK, USA

    Donald Ferguson

  4. University of Stuttgart, Stuttgart, Germany

    Frank Leymann

  5. Universitat Autònoma de Barcelona, Bellaterra, Spain

    Victor Méndez Munoz

Rights and permissions

Reprints and permissions

Copyright information

© 2015 Springer International Publishing Switzerland

About this paper

Cite this paper

Qanbari, S., Li, F., Dustdar, S., Dai, TS. (2015). An Economic Model for Utilizing Cloud Computing Resources via Pricing Elasticity of Demand and Supply. In: Helfert, M., Desprez, F., Ferguson, D., Leymann, F., Méndez Munoz, V. (eds) Cloud Computing and Services Sciences. CLOSER 2014. Communications in Computer and Information Science, vol 512. Springer, Cham. https://doi.org/10.1007/978-3-319-25414-2_4

Download citation

  • DOI: https://doi.org/10.1007/978-3-319-25414-2_4

  • Published:

  • Publisher Name: Springer, Cham

  • Print ISBN: 978-3-319-25413-5

  • Online ISBN: 978-3-319-25414-2

  • eBook Packages: Computer ScienceComputer Science (R0)

Publish with us

Policies and ethics

Search

Navigation