Valuable Words: Pricing Internet Domain Names

Abstract:     
This paper estimates the first constant quality price index for Internet domain names. The suggested index provides a benchmark for domain name traders and investors looking for information on price trends, historical returns and the fundamental risk of Internet domain names. The index increases transparency in the market for this newly emerged asset class. Furthermore, it can serve as a fever curve capturing the well-being of the Internet economy, as the demand for domains is linked to online business opportunities in general. This proxy also includes small online enterprises that are excluded by traditional stock-price indices.

The heterogeneity of domain names is controlled for by hedonic repeat sales regressions. The empirical work is based on a previously unexplored dataset of real domain transactions spanning the years 2006-2012.

Number of Pages in PDF File: 20

Keywords: internet domain names, hedonic repeat sales price indices, internet economy

working papers series