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The Trade Between the Virtual and the Real World: Buying and Selling Virtual Goods For Real Money

Händén Svensson, Erik (2007)
Department of Economics
Abstract
In this paper the trade of virtual items in online games for hard currency is analysed using economic theory. There are real welfare gains from trade but the game designer’s interests must be taken into account when deciding whether trade is desirable or not. Ricardo's Comparative Advantage and Hecksher-Ohlin Factor Proportion theories lead to conclusions about game design when trade is free. The intuitive suggestion, that making the game more fun could address problems when trade is free, is anchored in theory and support is found. In the virtual world the technology is not assumed, but set by the game designer. An Open Leontief Input-Output model is introduced as a tool for game designers, to specifically deal with adverse effects of... (More)
In this paper the trade of virtual items in online games for hard currency is analysed using economic theory. There are real welfare gains from trade but the game designer’s interests must be taken into account when deciding whether trade is desirable or not. Ricardo's Comparative Advantage and Hecksher-Ohlin Factor Proportion theories lead to conclusions about game design when trade is free. The intuitive suggestion, that making the game more fun could address problems when trade is free, is anchored in theory and support is found. In the virtual world the technology is not assumed, but set by the game designer. An Open Leontief Input-Output model is introduced as a tool for game designers, to specifically deal with adverse effects of trade but also for game design and evaluation of policy in the virtual economy in general. (Less)
Please use this url to cite or link to this publication:
author
Händén Svensson, Erik
supervisor
organization
year
type
H1 - Master's Degree (One Year)
subject
keywords
MMORPG, farmers, general equilibrium, Hecksher-Ohlin, Leontief, Economics, econometrics, economic theory, economic systems, economic policy, Nationalekonomi, ekonometri, ekonomisk teori, ekonomiska system, ekonomisk politik
language
English
id
1644078
date added to LUP
2007-06-13 00:00:00
date last changed
2010-08-05 13:34:13
@misc{1644078,
  abstract     = {{In this paper the trade of virtual items in online games for hard currency is analysed using economic theory. There are real welfare gains from trade but the game designer’s interests must be taken into account when deciding whether trade is desirable or not. Ricardo's Comparative Advantage and Hecksher-Ohlin Factor Proportion theories lead to conclusions about game design when trade is free. The intuitive suggestion, that making the game more fun could address problems when trade is free, is anchored in theory and support is found. In the virtual world the technology is not assumed, but set by the game designer. An Open Leontief Input-Output model is introduced as a tool for game designers, to specifically deal with adverse effects of trade but also for game design and evaluation of policy in the virtual economy in general.}},
  author       = {{Händén Svensson, Erik}},
  language     = {{eng}},
  note         = {{Student Paper}},
  title        = {{The Trade Between the Virtual and the Real World: Buying and Selling Virtual Goods For Real Money}},
  year         = {{2007}},
}