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Rethinking The Economy

There is a common belief that gold farming ruins virtual economies over time. We saw this sentiment earlier in the article and it is a fairly widespread belief.

As I understand it, they ruin the economy of the game world so that everything gets more and more expensive over time. I'd probably inform a GM or do something to hinder their efforts myself. They are absolutely despicable. [FFXI, M, 24]

The problem is that the impact of these secondary markets on the in-game markets of MMOs is not well understood. Moreover, it is not clear that they would have the same impact across MMOs with different economic mechanics. Some players in fact argue that gold farming may have a positive effect on their game economies:

I have chatted with gold farmers, to the degree that such interaction was possible. Most that I have talked to have limited English proficiency. I have actually clashed more with ignorant people who continue to insist that gold farmers create inflation. Being an economics teacher, I assure you that inflation would exist with or without gold farmers. Inflation occurs because of cash/resource parity. Since gold farmers do not drastically increase the amount of gold available on the server, traditional inflation is not due to gold farming. On the other hand, gold farmers do increase the number of rare resources available on the server, so may in fact decrease the rate of cash inflation. [WoW, M, 24]

In Lineage 2 they are everywhere, and everyone knows who they are. Initially, players were very hostile and attempted to harass them in large groups. After a while, players have realized that they are in fact necessary for the in game economy to function properly and many of the farmers have become friendly with regular players. [L2, M, 22]

A recent discussion over at Terra Nova also highlights that classical definitions and measures of inflation and deflation may not make sense for talking about certain game economies. Thus, it is oftentimes hard to tease out the impact of gold farming from the naturally-occurring process of inflation due to the never-ending influx of normal gold. And there are reasons to believe that gold farming may in fact help stabilize some game economies.

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Posted on January 2, 2006 | Comments (119) | TrackBack (0)

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