Will Virtual Economies Affect Real-World Economics?

Thanks to Game Studies for their Edward Castronova-authored article discussing the economics of massively multiplayer games, which asks the question: "Will these economies grow in importance? Second, if they do grow, how will that affect real-world economies and governments?" It's suggested that "the mere fact that Earth economies may suffer as people spend more time in cyberspace does not imply that humanity is worse off", as "the basket of produced goods is simply changing." Finally, some of the unique economic facets to virtual worlds are pointed out: "Economics, on Earth, argues that no wise government will try to control prices. In an avatar economy, however, the government can effortlessly peg many prices at any value."

Comments

Fixing Prices

[spencerogden]

It may be easier to fix prices in a virtual world (No Cops or raids neccessary). But that does not mean it will not hurt the virtual economy, or that a black market will not appear. Think of all the stories about selling virtual objects and characters on Ebay.

"Wise" Being the key word

[duffbeer703]

Economics, on Earth, argues that no wise government will try to control prices. In an avatar economy, however, the government can effortlessly peg many prices at any value.

Real, unwise governments institute price controls all of the time with devastating effect. Witness how the US healthcare industry is reacting to price ceilings instituted via insurance and government health programs and how the oil markets reacted to Nixon's attempts to curb inflation in the 1970's.

Re:"Wise" Being the key word

[KDan]

It does not even have anything to do with being wise, but with being capitalistic. The submitter is very narrow-minded. Purely capitalistic economics argues against price control. Purely communist economics argues for it. There's a wide range of possibilities between the two, and certainly not all have been proved unwise (and if they have been, then all governments are unwise because no government is 100% capitalistic).

Daniel

One positive aspect

[DuckDuckBOOM!]

of virtual economies is that they could enable experimentation with different socioeconomic theories without (serious) risk of screwing up real people's lives with the failures. I wonder how Marx's or von Mises' writings would have been affected if they'd had MMO simulators to play with?