We study a two-sided network investment game consisting of two sets of players, called providers and users. The game is set in two stages. In the first stage, providers aim to maximize their profit by investing in bandwidth of cloud computing services. The investments of the providers yield a set of usable services for the users. In the second stage, each user wants to process a task and therefore selects a bundle of services so as to minimize the total processing time. We assume the total processing time to be separable over the chosen services and the processing time of each service to depend on the utilization of the service and the installed bandwidth. We provide insights on how competition between providers affects the total costs of the users and show that every game on a series-parallel graph can be reduced to an equivalent single edge game when analyzing the set of subgame perfect Nash equilibria.
@cite_31: We study the competitive structure of a market in which firms compete to provide various products within a bundle. Firms adopt price functions proportional to their per-unit costs by selecting markups. We consider two measures reflecting, respectively, the intensity of direct competition and the impact of complementarity on each producer's markup. We characterize the sensitivity of these terms to various changes in the market structure and relate this to changes in producer profits and the social efficiency of the market.
A slightly different, but closely related model is the game analyzed by @cite_31 . Here each edge in a series-parallel network represents a producer that competes by selecting a markup that then determines a price function. The main difference to our work is that producers are identified by an edge and thus do not have the possibility to compete on other edges.