Not logged in.

Contribution Details

Type Conference or Workshop Paper
Scope Discipline-based scholarship
Published in Proceedings Yes
Title Cloud Pricing: The Spot Market Strikes Back
Organization Unit
Authors
  • Ludwig Dierks
  • Sven Seuken
Presentation Type paper
Item Subtype Original Work
Refereed Yes
Status Published in final form
Language
  • English
ISBN 978-1-4503-6792-9
Page Range 593
Event Title Proceedings of the 2019 ACM Conference on Economics and Computation
Event Type conference
Event Location Phoenix, AZ, USA
Event Start Date June 24 - 2019
Event End Date June 28 - 2019
Place of Publication New York, NY, USA
Abstract Text Cloud computing providers must constantly hold many idle compute instances available (e.g., for maintenance, or for users with long-term contracts). The resulting low average utilization is undesirable, as a large part of the costs a providers incurs for compute instances is independent of the usage. 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 model notably takes both running and fixed costs of compute resources, as well as the cost users incur when being preempted into account. Our main result is an easy-to-check condition on the setting 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. This shows that offering such an additional spot market is desirable even when providers face competition. Finally, we illustrate our results numerically to demonstrate the effects the provider's costs and her strategy have on her profit.
Official URL https://dl.acm.org/citation.cfm?id=3329590
Export BibTeX
EP3 XML (ZORA)