  This paper presents the economic impacts of spot instance service on the
cloud service providers (CSPs) and the customers when the CSPs offer it along
with the on-demand instance service to the customers. We model the interaction
between CSPs and customers as a non-cooperative two-stage dynamic game. Our
equilibrium analysis reveals (i) the techno-economic interrelationship between
the customers' heterogeneity, resource availability, and CSPs' pricing policy,
and (ii) the impacts of the customers' service selection (spot vs. on-demand)
and the CSPs' pricing decision on the CSPs' market share and revenue, as well
as the customers' utility. The key technical challenges lie in, first, how we
capture the strategic interactions between CSPs and customers, and second, how
we consider the various practical aspects of cloud services, such as
heterogeneity of customers' willingness to pay for the quality of service (QoS)
and the fluctuating resource availability. The main contribution of this paper
is to provide CSPs and customers with a better understanding of the economic
impact caused by a certain price policy for the spot service when the
equilibrium price, which from our two-stage dynamic game analysis, is able to
set as the baseline price for their spot service.
