New-gTLDs and The Law of Supply and Demand

If you’ve studied Economics – you may be aware of law of supply and demand, in-case you’ve forgotten this is what it says and I will decipher these laws in relation to new-gTLDs:

1. If demand increases and supply remains unchanged, a shortage occurs, leading to a higher price:
Thought: The demand is high for good generic domain names especially for TLDs like dot com, dot net and for some premium ccTLDs. Supply was limited because of very few top level generic domain name extensions and this is the reason why many generic names were exchanged for high prices.

2. If demand decreases and supply remains unchanged, a surplus occurs, leading to a lower price:
Thought: At the initial stages of domain names the demand was not high and supply was abundant which led to surplus quantities of generic and quality domain names at lower prices. Since, market was relatively new some early opportunist who saw golden future made the right decisions by acquiring value domain names at lower prices.

3. If demand remains unchanged and supply increases, a surplus occurs, leading to a lower price:
Thought: Here is the meat of the matter. Now thousands of new-gTLDs will be entering the domain market very soon which will allow the purchaser to register a single domain name thousand times using variety of domain extensions. If demand for domain names doesn’t increases simultaneously together with the increase in the supply of new domain extensions then it may probably lower the aftermarket prices for the domain names. The buyer instead of purchasing a domain name from aftermarket for a high price may just register it in another extensions by paying the registration fee.

4. If demand remains unchanged and supply decreases, a shortage occurs, leading to a higher price.
Thought: Over the long period of time the supply of quality domain names may get exhausted and if no more new domain name extensions takes place then a shortage will likely occur which may lead to an increase in the prices of aftermarket domain names.