Study on the contract characteristics of Internet architecture

The importance of Internet architecture goes beyond the technical aspects. The architecture of Internet has a profound influence on the Internet-based economy in term of how the profits are shared by different market participants (Internet Server Provider, Internet Content Provider), since it is the physical foundation upon which the profit-sharing contracts are derived. In order to facilitate the continuing growth of the Internet, it is necessary to systematically study factors that curtail the Internet-based economy including the existing Internet architecture. In this paper, we used transaction cost economics and contract economics as new tools to analyse the contracts derived from the current Internet architecture. This study sheds light on how the macro characteristics of Internet architecture effect the microeconomical decisions of market participants. Based on the existing Internet architecture, we discuss the possibility of promoting Internet-based economy by encouraging user to connect their private stub network to the Internet and giving the user more right of self-governing.