Virtual Worlds: A First-Hand Account of Market and Society on the Cyberian Frontier

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Virtual Worlds: A First-Hand Account of Market and Society on the Cyberian Frontier

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Edward Castronova ()

Abstract

In March 1999, a small number of Californians discovered a new world called "Norrath", populated by an exotic but industrious people. About 12,000 people call this place their permanent home, although some 60,000 are present there at any given time. The nominal hourly wage is about USD 3.42 per hour, and the labors of the people produce a GNP per capita somewhere between that of Russia and Bulgaria. A unit of Norrath's currency is traded on exchange markets at USD 0.0107, higher than the Yen and the Lira. The economy is characterized by extreme inequality, yet life there is quite attractive to many. The population is growing rapidly, swollen each each day by hundreds of imigris from various places around the globe, but especially the United States. Perhaps the most interesting thing about the new world is its location. Norrath is a virtual world that exists entirely on 40 computers in San Diego. Unlike many internet ventures, virtual worlds are making money -- with annual revenues expected to top USD 1.5 billion by 2004 -- and if network effects are as powerful here as they have been with other internet innovations, virtual worlds may soon become the primary venue for all online activity.

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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number CESifo Working Paper No. 618.

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Date of creation: 2001
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Handle: RePEc:ces:ceswps:_618

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Find related papers by JEL classification:
L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

Liebowitz, S J & Margolis, Stephen E, 1994. "Network Externality: An Uncommon Tragedy," Journal of Economic Perspectives, American Economic Association, vol. 8(2), pages 133-50, Spring. [Downloadable!] (restricted)
Katz, Michael L & Shapiro, Carl, 1994. "Systems Competition and Network Effects," Journal of Economic Perspectives, American Economic Association, vol. 8(2), pages 93-115, Spring. [Downloadable!] (restricted)
Besen, Stanley M & Farrell, Joseph, 1994. "Choosing How to Compete: Strategies and Tactics in Standardization," Journal of Economic Perspectives, American Economic Association, vol. 8(2), pages 117-31, Spring. [Downloadable!] (restricted)

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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

Edward Castronova, 2003. "Theory of the Avatar," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
Edward Castronova, 2003. "The Price of 'Man' and 'Woman': A Hedonic Pricing Model of Avatar Attributes in a Synthetic World," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
Edward Castronova, 2005. "On the Research Value of Large Games: Natural Experiments in Norrath and Camelot," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
Dymek, Mikolaj, 2006. "Communities build up Steam," Pink Machine Papers 26, Royal Institute of Technology, Department of Industrial Economics and Management. [Downloadable!]
Munro, Alistair & Ferreira De Sousa, Yannick, 2008. "Truck, barter and exchange versus the endowment effect: virtual field experiments in an online game environment," MPRA Paper 8977, University Library of Munich, Germany. [Downloadable!]

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