On artificial scarcity and superabundant supply. Competition and the Internet domain-name market

Domain names are essential for surfing the web. Name registration is subject to specific rules and domain names are managed worldwide by a private international organization, the Internet Corporation for Assigned Names and Num¬bers (ICANN). Ever since it was first formed in 1998 and up until 2013, ICANN’s policy on domain-name supply has been highly Malthusian and has led to a situation in which the “.com” extension is very much predominant because firms looking to be present on the Web simply cannot do without it. This dominant position has also led to the emergence of an economic rent for the VeriSign corporation that has the monopoly of managing the “.com” extension. After much criticism, ICANN decided in 2008 to open up the possibilities for creating new extensions. One of the main arguments ICANN made was that the increased competition further to the creation of multiple exten-sions would diversify supply and reduce the market power of “.com” and VeriSign. We shall show that the “pro-competition” effects of this surge in supply are probably overestimated while the costs for domain-name users are underestimated. The actual introduction of new extensions dates from the end of 2013 and we analyse actor strat-egies to cope with the far-reaching change in the basic conditions of the market.