[arin-ppml] Policy Proposal: IPv4 Recovery Fund

Milton L Mueller mueller at syr.edu
Mon Nov 24 13:13:53 EST 2008

> -----Original Message-----
> can we come up with a list of things in society that are traded, 
> that we consider important, and that are traded (1) without 
> mediation and (2) with mediation.  and then compare each list to 
> ip addresses, and see which category it seems more like?

The choice of bilateral/ARIN-centered will not come from which category
of resource ip addresses might be put into. The existence of mediation
is based on a number of factors that are specific to the transnaction
costs, not to the resource. 

There is well-established economic theory around the demand for and
function of mediation or brokerages. One key cause of mediation is the
informational gap between buyers and sellers. Mediators can economize
greatly on search costs. Sometimes (and here we stray a bit from pure
economics and into institutions) compulsory mediation plays a regulatory
or standard-setting function; e.g., professional certifications we
associate with everything from doctors to hairdressers. in that case you
create a bottleneck to impose uniform standards on the players. the
whole point is to create a bottleneck and regulate entry; it has little
or nothing to do with matching buyers and sellers. don't confuse these

ARIN has a legitimate role as a title agency that, as Ray puts it,
attests to the authenticity of the claim of the person SELLING the
resource. That function is quite separate from an intermediary
(matching) role, and from its role of approving or regulating access to
resources. Others want it to also attest to the right to BUY, i.e. needs
assessment. Which I think is too much. But either way, any insertion of
ARIN into the trading process could be designed to fulfill narrow
authentication functions and only those functions. 

Buyer-seller exchanges have network externalities (i.e., they often
become richer and more efficient the more all buyers and sellers use the
same exchange) so if indeed ARIN turns out to be the most efficient
solution to the search problem it doesn't need to require that everyone
use it, it only needs to offer the service and see who comes. In any
case it will be able to exploit its privileged position as keeper of the
registry. I would not want to try to compete with ARIN as an address
market maker.

Transparency can be required of all transfers, whether or not they are
forced to go through ARIN. Forcing them to go through ARIN, however
prima facie would reduce its monitoring and enforcement costs of the
transparency requirement -- assuming (a big if) that it can effectively
force everyone into its mediation. The more it ties its mediation to
non-matching functions, the stronger the incentives it creates to find
other intermediaries or to bypass it completely. 

hope that helps.



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