An Economic Analysis of Domain Name Policy

One of the most important features of the architecture of the Internet is the Domain Name System (DNS), which is administered by the Internet Corporation for Assigned Names and Numbers (ICANN). Logically, the DNS is organized into Top Level Domains (such as .com), Second Level Domains (such as amazon.com), and third, fourth, and higher level domains (such as www.amazon.com). The physically infrastructure of the DNS consists of name servers, including the Root Server System which provides the information that directs name queries for each Top Level Domain to the appropriate server. ICANN is responsible for the allocation of the root and the creation or reallocation of Top Level Domains. The Root Server System and associated name space are scarce resources in the economic sense. The root servers have a finite capacity and expansion of the system is costly. The name space is scarce, because each string (or set of characters) can only be allocated to one Registry (or operator of a Top Level Domain). In addition, name service is not a public good in the economic sense, because it is possible to exclude strings from the DNS and because the allocation of a string to one firm results in the inability of other firms to use that name string. From the economic perspective, therefore, the question arises: what is the most efficient method for allocating the root resource? There are only five basic options available for allocation of the root. (1) a static root, equivalent to a decision to waste the currently unallocated capacity; (2) public interest hearings (or beauty contests); (3) lotteries; (4) a queuing mechanism; or (5) an auction. The fundamental economic question about the Domain Name System is which of these provides the most efficient mechanism for allocating the root resource? This resource allocation problem is analogous to problems raised in the telecommunications sector, where the Federal Communications Commission has a long history of attempting to allocate broadcast spectrum and the telephone number space. This experience reveals that a case-by-case allocation on the basis of ad hoc judgments about the public interest is doomed to failure, and that auctions (as opposed to lotteries or queues) provide the best mechanism for insuring that such public-trust resources find their highest and best use. Based on the telecommunications experience, the best method for ICANN to allocate new Top Level Domains would be to conduct an auction. Many auction designs are possible. One proposal is to auction a fixed number of new Top Level Domain slots each year. This proposal would both expand the root resource at a reasonable pace and insure that the slots went to their highest and best use. Public interest Top Level Domains could be allocated by another mechanism such as a lottery and their costs to ICANN could be subsidized by the proceeds of the auction

Fixing Hollingsworth: Standing in Initiative Cases

In Hollingsworth v. Perry, the Supreme Court dismissed an appeal filed by the “Official Proponents” of California’s Proposition 8, which banned same-sex marriage in California. Chief Justice Roberts’ majority opinion held that initiative sponsors lack Article III standing to defend their ballot measures even when state officials refuse to defend against constitutional challenges. As a result, Hollingsworth provides state officers with the ability to overrule laws that were intended to bypass the government establishment—in effect, an “executive veto” of popularly-enacted initiatives. The Article examines this new “executive veto” in depth. It places Hollingsworth in context, discussing the initiative process in California, and the history of the federal lawsuit challenging Proposition 8. An in-depth discussion of Hollingsworth follows. The particular issue presented by the appellants, their claim to standing based on their status as representatives of the People of California, and the Court’s treatment of that issue, is scrutinized. This includes the Court’s rejection of California law on the legal status of initiative proponents, and its adoption of the Restatement of Agency as the basis for Article III standing. After concluding that Hollingsworth establishes an “executive veto” over the initiative process, the Article proceeds to examine the potential effect of this in California and the thirty-six other “direct democracy” states. Finally, the authors present a series of “fixes” to Hollingsworth’s executive veto. These could assure defense of initiatives in the future, protecting them from the fate that Proposition 8 suffered in Hollingsworth