[arin-ppml] Spartan allocation proposal for transfers

Ben Edelman ben at benedelman.org
Mon Oct 10 18:38:54 EDT 2011


Thanks for your interest.  A couple quick thoughts --

 

As John says, this paper is not work ARIN requested of me; it's a paper I
wrote on my own.  Incidentally I wrote an earlier paper on v4 scarcity,
available here: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1337075 ,
also independent of my work with ARIN.  

 

On the complexity of the paper and mathematical approach: Indeed.  The
economics profession typically uses a certain formality, which is sometimes
helpful and sometimes a distraction.  I write in that genre in order to fit
the norms of those who expect it.  But I have a healthy skepticism for how
useful it is.  At the very least, I'll always do my best to help clarify
wherever folks flag the problem.

 

Owen wrote: "I do find the assumption that the price of IPv4 addresses
declines post exhaustion rather startling vs. the reality that everyone
expects IPv4 addressing prices will increase until IPv4 is obsoleted."  

 

My intuition here: If a seller thought the price was about to jump, why
would the seller sell?  Perhaps the seller badly needs the money, but then
the seller might be better off getting a bank loan and repaying that loan
with the IP addresses to be sold at a later date.  Clearly not everyone can
get loans, for various important reasons.  But if most folks expect prices
to rise, it's not clear why anyone would sell.  That's the basic intuition
for why prices shouldn't rise slowly over time, but rather should quickly
rise to a level that reflects expectations of future value.

 

Of course if the v6 transition goes more slowly than expected -- bearing in
mind that it may already be expected to take quite some time -- then demand
for v4 may exceed prior expectations, and prices may increase further.  

 

Mike, in prior discussion with ARIN members and others, I did occasionally
hear casual mention of approaches that sound like the spartan allocation
rule.  For example, some suggested that if a seller is selling an entire
allocation, it doesn't matter whether the buyer needs to buy from several
such sellers because, on net, no new routes are being created.  Of course
there might still be a downside of permitting those transactions, e.g. if
that buyer would previously have bought just one block, but now ends up with
several, and then some big sellers disaggregates to satisfy several small
buyers.  Our paper is a step towards evaluating the pros and cons of
policies in this area.

 

I'll be in Philadelphia beginning Wednesday evening (unfortunately can't
make it before then).  I read this list and am always reachable by email .

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