“Economic mechanisms (including pricing, SLAs and auctions), address the incentives of users and service providers, each of whom responds according to his own best interest. Thus, when appropriately designed, economic mechanisms are a powerful distributed tool for the efficient allocation, management, and sharing of network resources (bandwidth, spectrum), cloud resources, digital goods (content and sensor data), and even energy goods (e.g. NegaWatts) in smart grids.

In the introduction of this talk, I will present a brief overview of the relevant research carried out in the Network Economics and Services (NES) Group of AUEB.

In the second part of this talk, I will consider the problem of the formation of an economically sustainable federation of resources by Cloud Service Providers. I will introduce a relevant queueing model that can be employed to derive the optimal federation policy that maximizes the total profit (revenue minus cost) of CSPs while also taking into account the incentives of individual CSPs. I will also present some results on the properties of the optimal policy.

In the third part of this talk, I will briefly present the Inter-Cloud Communication Traffic Management mechanism, which performs rate control over the ISP transit link(s) aiming to attain a target reduction of transit cost.

Both of the above works are being carried out in the context of EU-funded project SmartenIT.”