The cloud computing paradigm gives rise to Web service marketplaces where complex services are
provided by several modular vendors. Recently more and more intermediaries are pushing onto the
market, thereby driving competition. Offering innovative business models which are capable of
attracting service providers and consumers is a reasonable strategy to beat competitors and to take
advantage of network effects. We develop a mechanism that introduces a novel way of distributing
revenues among service providers – the power ratio. Its underlying presumption is not only to
compensate service providers who actually contribute to a complex service offered at a time, but also
to pay out partners who are on standby – i.e. vendors that support the network’s variety and stability,
but actually do not contribute to the complex service delivered. We show that a payment function that
is based upon the power ratio is a promising approach to draw in service providers as it outperforms
a payment function that rewards vendors merely based on their actual allocation in terms of expected
payoffs for different types of service vendors.
Conte, Tobias; Blau, Benjamin; and Xu, Yongchun, "Competition of Service Marketplaces: Designing Growth in Service Networks" (2010). ECIS 2010 Proceedings. 123.