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    Auerbach Weighs in for gTLD Lotteries | Log in/Create an Account | Top | 49 comments | Search Discussion
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    Re:Unlimited TLDs
    by lsolum on Monday April 07 2003, @07:30AM (#11452)
    User #3416 Info | http://lsolum.blogspot.com/
    This comment is based on a misunderstanding of the nature of the scarcity involved in the root resource. The root of the DNS involves two scarce resources.

    The first resource that is scarce is the root server system itself. As Peter Barron observes, this is not the most significant source of scarcity. There is, however, an incorrect factual assumption in Peter's post. Not all gTLDs need to be open registries involving the substantial level of expense assumed in Peter's post. Given a significantly expanded number of slots, many gTLDs would be proprietary or sponsored, involving very limited numbers of registrations. Thus, the 1000 upper limit that Peter's post postulates may well be incorrect.

    The second scarce resource is the root name space.
    Not all strings (names) are equally valuable. Once a string is appropriated (e.g. assigned to a gTLD operator or registry) that string is not available to others. In other words, each unique string of characters (such as “.com” or “.info”) is unique, and hence scarce in the economic sense. Any TLD string that is sought by 2 or more firms is "scarce;" therefore, some allocation method must be employed.

    This second source of scarcity means that Peter is wrong about the nature of the resource allocation issue.
    Peter writes:
      At that point, it's simply a question of the order of admission.
    This assertion is demonstrably incorrect. Because some strings will be highly desirable, there will be competition for those strings. Some allocation mechanism must be provided. A queueing mechanism, which appears to be Peter's preferred option, would be highly inefficient. First, it will create a landrush--whenever the queue is opened. Technological means are likely to result in some parties obtaining large numbers of slots. This was the experience with the Australian ccTLD landrush. Second, it will simply lead to a secondary market in the desirable strings--essentially an auction, but with two differences: a) windfall profits to those who win the landrush competition, and b) inefficient, dead weight losses, as a result of the transaction costs incurred in the secondary market.

    My thanks to Peter for his thoughtful comments
    This is the kind of input that advances the discussion.Lawrence Solum
    [ Reply to This | Parent ]
    Re:Unlimited TLDs by lsolum
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