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Cloud Pricing: The Spot Market Strikes Back

Published: 17 June 2019 Publication History

Abstract

Cloud computing providers must constantly hold many idle compute instances available (e.g., for maintenance, or for users with long-term contracts). A natural idea to increase the provider's profit is to sell these idle instances on a spot market where users can be preempted. However, this ignores the possible "market cannibalization'' that may occur in equilibrium. In particular, users who would generate more profit in the provider's existing fixed-price market might move to the spot market and generate less profit. In this paper, we model the provider's profit optimization problem using queuing theory and game theory and analyze the equilibria of the resulting queuing system. Our main result is an easy-to-check condition under which offering a market consisting of fixed-price instances as well as some spot instances (using idle resources) increases the provider's profit over offering only fixed-price instances. Furthermore, we show that under our condition, such a profit increase can always be combined with a Pareto improvement for the users. Finally, we illustrate our results numerically to demonstrate the effects the provider's costs and her strategy have on her profit. Full paper: https://ssrn.com/abstract=3383420

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Cited By

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  • (2021)On the Cluster Admission Problem for Cloud ComputingJournal of Artificial Intelligence Research10.1613/jair.1.1234671(1-40)Online publication date: 5-May-2021
  • (2021)SPA: Harnessing Availability in the AWS Spot MarketIEEE INFOCOM 2021 - IEEE Conference on Computer Communications Workshops (INFOCOM WKSHPS)10.1109/INFOCOMWKSHPS51825.2021.9484646(1-6)Online publication date: 10-May-2021
  • (2019)A Framework for Allocating Server Time to Spot and On-Demand Services in Cloud ComputingACM Transactions on Modeling and Performance Evaluation of Computing Systems10.1145/33666824:4(1-31)Online publication date: 6-Dec-2019
  • Show More Cited By

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cover image ACM Conferences
EC '19: Proceedings of the 2019 ACM Conference on Economics and Computation
June 2019
947 pages
ISBN:9781450367929
DOI:10.1145/3328526
Permission to make digital or hard copies of part or all of this work for personal or classroom use is granted without fee provided that copies are not made or distributed for profit or commercial advantage and that copies bear this notice and the full citation on the first page. Copyrights for third-party components of this work must be honored. For all other uses, contact the Owner/Author.

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Association for Computing Machinery

New York, NY, United States

Publication History

Published: 17 June 2019

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Author Tags

  1. cloud computing
  2. equilibrium analysis
  3. game theory
  4. profit optimization
  5. queueing theory

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  • Extended-abstract

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EC '19
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EC '19: ACM Conference on Economics and Computation
June 24 - 28, 2019
AZ, Phoenix, USA

Acceptance Rates

EC '19 Paper Acceptance Rate 106 of 382 submissions, 28%;
Overall Acceptance Rate 664 of 2,389 submissions, 28%

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EC '25
The 25th ACM Conference on Economics and Computation
July 7 - 11, 2025
Stanford , CA , USA

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Cited By

View all
  • (2021)On the Cluster Admission Problem for Cloud ComputingJournal of Artificial Intelligence Research10.1613/jair.1.1234671(1-40)Online publication date: 5-May-2021
  • (2021)SPA: Harnessing Availability in the AWS Spot MarketIEEE INFOCOM 2021 - IEEE Conference on Computer Communications Workshops (INFOCOM WKSHPS)10.1109/INFOCOMWKSHPS51825.2021.9484646(1-6)Online publication date: 10-May-2021
  • (2019)A Framework for Allocating Server Time to Spot and On-Demand Services in Cloud ComputingACM Transactions on Modeling and Performance Evaluation of Computing Systems10.1145/33666824:4(1-31)Online publication date: 6-Dec-2019
  • (2019)On the cluster admission problem for cloud computingProceedings of the 14th Workshop on the Economics of Networks, Systems and Computation10.1145/3338506.3340274(1-6)Online publication date: 28-Jun-2019
  • (undefined)Cloud Pricing: The Spot Market Strikes BackSSRN Electronic Journal10.2139/ssrn.3383420

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