Pricing differentiated brokered internet services

Price war, as an important factor in undercutting competitors and attracting customers, has spurred considerable work that analyzes such conflict situation. However, in most of these studies, quality of service (QoS), as an important decision-making criterion, has been neglected. Furthermore, with the rise of service-oriented architectures, where players may offer different levels of QoS for different prices, more studies are needed to examine the interaction among players within the service hierarchy. In this paper, we present a new approach to modeling price competition in service-oriented architectures, where there are multiple service levels. In our model, brokers, as the intermediaries between end-users and service providers, offer different QoS by adapting the service that they obtain from lower-level providers so as to match the demands of their clients to the services of providers. To maximize profit, players at each level, compete in a Bertrand game, while they offer different QoS. To maintain an oligopoly market, we then describe underlying dynamics which lead to a Bertrand game with price constraints at the providers' level. Numerical examples demonstrate the behavior of brokers and providers and the effect of price competition on their market shares.http://www.cs.bu.edu/fac/matta/Papers/sdp2016.pdfAccepted manuscrip

The effect of competition among brokers on the quality and price of differentiated internet services

Price war, as an important factor in undercutting competitors and attracting customers, has spurred considerable work that analyzes such conflict situation. However, in most of these studies, quality of service (QoS), as an important decision-making criterion, has been neglected. Furthermore, with the rise of service-oriented architectures, where players may offer different levels of QoS for different prices, more studies are needed to examine the interaction among players within the service hierarchy. In this paper, we present a new approach to modeling price competition in (virtualized) service-oriented architectures, where there are multiple service levels. In our model, brokers, as the intermediaries between end-users and service providers, offer different QoS by adapting the service that they obtain from lower-level providers so as to match the demands of their clients to the services of providers. To maximize profit, players, i.e. providers and brokers, at each level compete in a Bertrand game while they offer different QoS. To maintain an oligopoly market, we then describe underlying dynamics which lead to a Bertrand game with price constraints at the providers' level. Numerical simulations demonstrate the behavior of brokers and providers and the effect of price competition on their market shares.This work has been partly supported by National Science Foundation awards: CNS-0963974, CNS-1346688, CNS-1536090 and CNS-1647084

The effect of (non-)competing brokers on the quality and price of differentiated internet services

Price war, as an important factor in undercutting competitors and attracting customers, has spurred considerable work that analyzes such conflict situation. However, in most of these studies, quality of service (QoS), as an important decision-making criterion, has been neglected. Furthermore, with the rise of service-oriented architectures, where players may offer different levels of QoS for different prices, more studies are needed to examine the interaction among players within the service hierarchy. In this paper, we present a new approach to modeling price competition in (virtualized) service-oriented architectures, where there are multiple service levels. In our model, brokers, as intermediaries between end-users and service providers, offer different QoS by adapting the service that they obtain from lower-level providers so as to match the demands of their clients to the services of providers. To maximize profit, players, i.e. providers and brokers, at each level compete in a Bertrand game while they offer different QoS. To maintain an oligopoly market, we then describe underlying dynamics which lead to a Bertrand game with price constraints at the providers’ level. We also study cooperation among a subset of brokers. Numerical simulations demonstrate the behavior of brokers and providers and the effect of price competition on their market shares.Accepted manuscrip

Network Game Theory Models of Services and Quality Competition with Applications to Future Internet Architectures and Supply Chains

The Internet has transformed the way in which we conduct business and perform economic and financial transactions. One key challenge of the Internet is the inefficiency of the mechanisms by which technology is deployed and the business and economic models surrounding these processes (Wolf et al. (2014)). Equilibrium models for the Internet generally assume basic economic relationships. However, in new paradigms for the Internet and in supply chain networks, price is not the only factor; quality of service (QoS) is also of increasing importance. Supply chains networks, which give us the means to manufacture products and deliver them to points of demand across the globe, are also under many pressures to offer differentiated products and services (Nagurney (2014)). It is well-known today that success is determined by how well the entire supply chain performs, rather than the performance of its individual entities. This dissertation contributes to the analysis, design, and management of the future Internet and supply chain networks with a focus on price and quality competition in service-oriented networks. Specifically, I focus on economic models for the Internet of the future by developing both a basic and a general network economic game theory model of a quality-based service-oriented Internet to study competition among service providers. To study and analyze the underlying dynamics of the various economic decision-makers, subsequently, I develop a dynamic network economic model of a service-oriented Internet with price and quality competition using projected dynamical systems theory. Then, to assess the prices for various contract durations at the demand markets, I consider a game theory model of a service-oriented Internet in which the network providers compete in usage service rates, quality levels, and duration-based contracts. Finally, I construct a model that captures the competition among manufacturers and freight service providers in a supply chain network. This model is the first one in the literature that handles both price and quality competition with multiple modes of shipment from both equilibrium and dynamic perspectives. For each model, I derive the governing equilibrium conditions and provide the equivalent variational inequality formulations. In order to illustrate the modeling framework and the algorithm, I present computed solutions to several numerical examples for each model as well as sensitivity analysis results. This dissertation is heavily based on the following papers: Saberi, Nagurney, and Wolf (2014), Nagurney et al. (2014a), Nagurney et al. (2015b), and Nagurney et al. (2015a) as well as additional results and conclusions

Multi-attribute demand characterization and layered service pricing

As cloud computing gains popularity, understanding the pattern and structure of its workload is increasingly important in order to drive effective resource allocation and pricing decisions. In the cloud model, virtual machines (VMs), each consisting of a bundle of computing resources, are presented to users for purchase. Thus, the cloud context requires multi-attribute models of demand. While most of the available studies have focused on one specific attribute of a virtual request such as CPU or memory, to the best of our knowledge there is no work on the joint distribution of resource usage. In the first part of this dissertation, we develop a joint distribution model that captures the relationship among multiple resources by fitting the marginal distribution of each resource type as well as the non-linear structure of their correlation via a copula distribution. We validate our models using a public data set of Google data center usage. Constructing the demand model is essential for provisioning revenue-optimal configuration for VMs or quality of service (QoS) offered by a provider. In the second part of the dissertation, we turn to the service pricing problem in a multi-provider setting: given service configurations (qualities) offered by different providers, choose a proper price for each offered service to undercut competitors and attract customers. With the rise of layered service-oriented architectures there is a need for more advanced solutions that manage the interactions among service providers at multiple levels. Brokers, as the intermediaries between customers and lower-level providers, play a key role in improving the efficiency of service-oriented structures by matching the demands of customers to the services of providers. We analyze a layered market in which service brokers and service providers compete in a Bertrand game at different levels in an oligopoly market while they offer different QoS. We examine the interaction among players and the effect of price competition on their market shares. We also study the market with partial cooperation, where a subset of players optimizes their total revenue instead of maximizing their own profit independently. We analyze the impact of this cooperation on the market and customers' social welfare

Tight oligopolies: in search of proportionate remedies

Tight oligopolies are oligopolies the market characteristics of which facilitate the realisation of supranormal profits for a substantial period of time. We entangle the link between market structure and the possibility of welfare reducing behaviour by firms. A useful distinction can be made between ‘unilateral effects' (oligopolistic firms realise supra-normal profits without co-ordinating their strategies) and ‘co-ordinated effects' (oligopolistic firms realise supra-normal profits by co-ordinating their strategies). The study develops a ‘diagnostic approach', a tool that helps policy makers find proportionate remedies to tight oligopolies: (1) ‘prevent' a market from becoming a tight oligopoliy; (2) ‘cure' a currently tight oligopoly by changing the market structure; and (3) treat the symptoms of an established tight oligopoly. We apply this diagnostic approach to six cases of (potentially) tight oligopolies.

Game Theory Relaunched

The game is on. Do you know how to play? Game theory sets out to explore what can be said about making decisions which go beyond accepting the rules of a game. Since 1942, a well elaborated mathematical apparatus has been developed to do so; but there is more. During the last three decades game theoretic reasoning has popped up in many other fields as well - from engineering to biology and psychology. New simulation tools and network analysis have made game theory omnipresent these days. This book collects recent research papers in game theory, which come from diverse scientific communities all across the world; they combine many different fields like economics, politics, history, engineering, mathematics, physics, and psychology. All of them have as a common denominator some method of game theory. Enjoy