Pricing and Efficiency in the Market for IP Addresses

Benjamin Edelman () and Michael Schwarz ()
Additional contact information
Benjamin Edelman: Harvard Business School, Negotiation, Organizations & Markets Unit
Michael Schwarz: Yahoo! Research Labs

No 12-020, Harvard Business School Working Papers from Harvard Business School

Abstract: We consider market rules for transferring IP addresses, numeric identifiers required by all computers connected to the Internet. Transfers usefully move resources from lowest to highest-valuation networks, but transfers tend to cause socially costly growth in the Internet's routing table. We propose a market rule that avoids excessive trading and comes close to achieving social efficiency. We argue that this rule is feasible despite the limited powers of central authorities. We also offer a framework for reasoning about future prices of IP addresses, then explore the role of rentals in sharing information about the value of IP address and assuring allocative efficiency.

Keywords: market design; externalities; Internet; intermediaries (search for similar items in EconPapers)
JEL-codes: D02 D04 D47 L86 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2011-09, Revised 2014-04
New Economics Papers: this item is included in nep-ict, nep-ind and nep-mkt
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.hbs.edu/faculty/pages/download.aspx?name=12-020.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hbs:wpaper:12-020

Access Statistics for this paper

More papers in Harvard Business School Working Papers from Harvard Business School Contact information at EDIRC.
Bibliographic data for series maintained by HBS ().