Equilibrium in cloud computing market

The emerging market of public and private cloud infrastructure benefits the end users, as it reduces their costs, introduces new efficient services and provides variety of products. End-users primary deal with private clouds or brokers, which serve all the users needs, and if needed, buy extra capacity from public cloud. In this paper we study such a three-level market structure. Our goal is to find Nash equilibrium of prices in this market as well as market influence on the end users. We observe that new resources at public clouds positively affect the market from the end-user perspective. Additionally our observation indicates that the switching cost plays an important role in achieving the optimal point in average market price value, and thus reduction of the switching costs will benefit end-users even more. Thus the results imply that standardization of the interfaces and interoperability between various clouds increases market efficiency.