Castronova, Edward (2006).
A Cost-Benefit Analysis of Real-Money Trade in the Products of Synthetic Economies.
A Cost-Benefit Analysis of Real-Money Trade in the Products of Synthetic Economies.
Available online at:
http://ssrn.com/abstract=917124
Abstract from the paper
This paper describes a basic supply-demand model for real-money trade (RMT) in the goods produced within synthetic economies, and then applies welfare analysis to the external effects of that trade. The trade has emerged to the level of hundreds of millions of dollars in the past few years, mostly because of the rapid growth in the number of users of synthetic worlds. The externality that results is the disruption of ordinary game play for others: when some players use real money to buy game assets, the game itself is damaged in much the same way that the experience of playing Monopoly would be damaged if some players traded properties for real US dollars. Given the current amount of trade, the damages of RMT may be substantial, and the object of the paper is to provide a plausible range of estimates for the damage under reasonable assumptions about the market for synthetic goods and its effect on game-access subscriptions. The intended readership of the paper is a hybrid consisting of economists potentially interested in new markets in cyberspace, and game industry experts interested in the economic analysis of RMT. Since the expertise of these two groups does not overlap very much, the paper contains much material that is at an introductory level for one or the other. The objective is to provide a final analysis and set of estimates that appear to be reasonable to both groups from the standpoint of their respective expertise areas.
:
Huhh, Jun-Sok (2006).
Effects of Real-Money Trading on MMOG Demand: A Network Externality Based Explanation.
Available online at:
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=943368
Abstract from this paper
This paper is a theoretical exploration on the connection between real-money trading (RMT) and the demand of massively multi-players online game (MMOG). For network externality inherent in MMOG, demand function of the game has not normal downward-sloping shape. That gives the RMT more critical role in achieving a commercial success of a game. By simulated data from software Mathematica, the effects of changes in game-related variables are identified. The game with environment inducing more lively RMT could have more chance to hit critical mass. We also review the welfare effects of RMT. Contrary to the common belief, RMT could bring about Pareto-improving results at social level. In the strict economic sense, there is no welfare reducing consequence in RMT activities.