Does Congestion Always Hurt? Managing Discount Under Congestion in a Game-Theoretic Setting

We observe a situation wherein a consumer (e.g., Uber) buys cloud potential from a seller (e.g., Amazon Web offerings) to run its business. One of the important thing elements that impacts the great of cloud offerings is congestion, and it has drawn full-size interest in current years. Congestion ends in a capability lack of cease customers (e.g., riders and drivers of Uber), thereby adversely affecting the call for for cloud offerings. Discount has been a beneficial imply to stimulate call for and praise purchaser loyalty. However, withinside the presence of congestion, the impact of cut price on call for is ambiguous. On the only hand, a better cut price ends in better call for; on the opposite hand, better call for can result in better congestion, thereby decreasing the call for. Given that cease customers are each rate and congestion sensitive, the selection of most excellent cut price below congestion is, therefore, now no longer straightforward. Using a game-theoretic model, we observe the dynamics among congestion and cut price and discover how congestion moderates each the consumer’s and seller’s most excellent selections. Our outcomes display that the consumer isn’t always always worse off even if the cease customers are extra illiberal to congestion. In fact, we discover that after cease customers are extra congestion sensitive, the call for of cloud offerings can certainly from time to time increase, and the bargain provided through the vendor can decrease. These findings have critical managerial implications on the vendor’s pricing and potential selections. We additionally study that a decrease price of era can from time to time harm the consumer, and the consumer can byskip on decrease advantages to cease customers. Moreover, for the reason that the cloud offerings are susceptible to disruptions, a consumer reassets from a couple of cloud vendors, which similarly complicates the matter. We draw beneficial insights approximately the consumer’s procurement selections below congestion in a multicloud setup.

You May Also Like