In today’s fast-paced technological landscape, cloud federation has emerged as a groundbreaking solution, transforming the way businesses and organizations utilize cloud computing. Cloud federation involves collaboration among multiple Cloud Service Providers (CSPs), allowing them to share computational resources within a unified environment. However, creating a functional marketplace within a cloud federation poses a significant challenge, requiring providers to develop optimal strategies to maximize profitability. This paper addresses the challenge of forming effective federations, conceptualized as a cooperative game with transferable utility. The proposed framework focuses on providers with surplus resources coming together to form coalitions, thereby meeting the resource needs of other providers. To address this, the Coalitional Game-Top Trading Cycles (CG-TTC) mechanism has been introduced—a decentralized approach that uses the well-known Top Trading Cycle assignment algorithm to tackle coalition formation challenges. Importantly, the CG-TTC solution has been shown to be both Pareto optimal and individually stable, ensuring that providers have no incentive to leave their coalitions. Empirical results show that the CG-TTC mechanism improves profitability by up to 34% and enhances fairness by up to 32% compared to the Cloud Federation Formation Mechanism (CFFM).

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