Date of Award
Doctor of Philosophy (PhD)
In this dissertation I study the market for IPv4 addresses - a multi-billion dollar market that is crucial for seamless internet communication. As this market has been understudied due to lack of accessible data, I collect data from various sources and create novel datasets that make this study possible.
In the chapter, ``Technology transition with frictions: Evidence from the market for IP addresses", I introduce IP addresses and the market for IPv4 addresses. Each IPv4 address is a durable, homogenous resource and has zero fundamental value once the standard changes from IPv4 to IPv6. Yet in the market prices have been continuously increasing. Understanding this pricing puzzle is not just interesting from a theoretical perspective, but also crucial for applied policy analysis.
To understand these and other empirical facts I explore the transition of firms from IPv4 to IPv6 in the presence of market frictions. The two key frictions in the market are switching costs and network effects. To substantiate this, I develop a dynamic model of firm behavior and calibrate the model to get a plausibly parametrized version of the model. This model can explain the striking increase in prices observed and the delay in IPv6 adoption.
In the parameterized version of the model I find that it would take 33 years to reach near complete IPv6 adoption. In counterfactual simulations, I examine the role of frictions and optimal adoption path by a social planner. A regulation that aims to shut down the market by a certain period leads to a coordination in IPv6 adoption and increase in producer surplus, thus making it in an effective policy tool to enable transition to IPv6. Thus, in the presence of market frictions, the market on its own could fail in efficiently transitioning to the next protocol.
George, Sarah, "Essays On The Market For Ipv4 Addresses" (2022). Publicly Accessible Penn Dissertations. 5482.