International Journal of Cloud Applications and Computing, 3(2), 1-11, April-June 2013 1 Copyright © 2013, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited. ABSTRACT Infrastructure as a Service (IaaS) offers hardware resources (computing power, storage and network) as a service to its customers. The customers order these resources in the form of a lease. Aim of any service provider is to make a leasing plan to maximize the number of accepted leases. Opennebula is popular open source toolkit for building IaaS cloud. Opennebula has its own lease manager and it can also be integrated with Haizea which is an open source lease manager. An economy based algorithm should focus on incentives of both the consumers and the providers. In this paper, an economy based leasing algorithm is developed and integrated with Haizea. This economy based algorithm takes care of incentives of both the parties i.e. customer and service provider. It uses the concept of optimization techniques to optimize the costs. The incentive for customers is lower cost of execution of its lease on the capable node as compare to existing non-economy based algorithms. If an appropriate resource is not found, then the algorithm uses negotiation on budget and resource demand; that increases the number of accepted lease. Thus, incentive for providers is an increase in proft as the amount of accepted leases increase. Experimental results show that the proposed economy based leasing algorithm reduces the cost of execution of the consumer’s lease and increases the proft of the provider to a considerable extent. Economy Based Resource Allocation in IaaS Cloud Hemant Kumar Mehta, School of Computer Science and IT, Devi Ahilya University, Indore, Madhya Pradesh, India Eshan Gupta, Department of Computer Science and Engineering, Institute of Professional Studies College of Technology & Management, Gwalior, Madhya Pradesh, India Keywords: Economy Based Leasing Algorithm, Economy Based Resource Allocation, Infrastructure as a Service (IaaS) Cloud, Negotiation, Optimization 1. INTRODUCTION Cloud services divided into three broad cat- egories; they are Infrastructure as a Service, Platform as a Service, and Software as a Service. These services called as fifth utility as it pro- vides to end users exactly the same as a public utility service like electricity, water, and gas (Buyya, 2009). Infrastructure as a service offers processors, storage and network hardware as a service based on pay-as-you-use and on-demand computing models to the end users. Platform as a service provides computing platform and application solution stack as a service. In this model, the consumer creates the software us- ing the tools and APIs provided by the service provider. The users also control the software configuration and deployment. Platform as a service provides the deployment of application without complexity of buying and managing DOI: 10.4018/ijcac.2013040101