Near Optimal and Dynamic Mechanisms Towards a Stable NFV Market in Multi-Tier Cloud Networks

With the fast development of next-generation networking techniques, a Network Function Virtualization (NFV) market is emerging as a major market that allows network service providers to trade various network services among consumers. Therefore, efficient mechanisms that guarantee stable and efficient operations of the NFV market are urgently needed. One fundamental problem in the NFV market is how to maximize the social welfare of all players, so they have incentives to participate in activities of the market. In this paper, we first formulate the social welfare maximization problem, with an aim to maximize the total revenue of all players in the NFV market. For the social welfare maximization problem, we design an efficient incentive-compatible mechanism and analyze the existence of a Nash equilibrium of the mechanism. We also consider an online social welfare maximization problem without the knowledge of future request arrivals. We devise an online learning algorithm based on Multi-Armed Bandits (MAB) to allow both customers and network service providers to make decisions with uncertainty of customers' strategy. We evaluate the performance of the proposed mechanisms by both simulations and test-bed implementations, and the results show that the proposed mechanisms obtain at most 23% higher social welfare than existing studies.