Abstract

http://ssrn.com/abstract=1934217
 
 

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Pricing and Efficiency in the Market for IP Addresses


Benjamin G. Edelman


Harvard University - HBS Negotiations, Organizations and Markets Unit

Michael Schwarz


Yahoo! Research Labs; National Bureau of Economic Research (NBER)

April 15, 2014

Harvard Business School NOM Unit Working Paper No. 12-020

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.

Number of Pages in PDF File: 39

Keywords: market design, externalities, Internet, intermediaries

JEL Classification: D02, D04, D47, L86

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Date posted: September 27, 2011 ; Last revised: April 16, 2014

Suggested Citation

Edelman, Benjamin G. and Schwarz, Michael, Pricing and Efficiency in the Market for IP Addresses (April 15, 2014). Harvard Business School NOM Unit Working Paper No. 12-020. Available at SSRN: http://ssrn.com/abstract=1934217 or http://dx.doi.org/10.2139/ssrn.1934217

Contact Information

Benjamin G. Edelman (Contact Author)
Harvard University - HBS Negotiations, Organizations and Markets Unit ( email )
Soldiers Field
Boston, MA 02163
United States
HOME PAGE: http://people.hbs.edu/bedelman
Michael Schwarz
Yahoo! Research Labs ( email )
Pasadena, CA 91103
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
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