[MUD-Dev] BIZ: Ban selling of in-game items for real cash?

[Matthew Mihaly]

Tess Lowe wrote:
> Matt Mihaly wrote:

> [On disallowing secondary markets]

>> I just see the logic as pretty simple. If you're the only one
>> with the goods to sell, you're getting 100% of the cash from
>> everyone who buys that item.

> Matt, is there evidence to back up this assertion that preventing
> a secondary market leads to greater profits for the developer? I
> dont think the logic is so clear cut.

Yeah, fair enough, it's not some sort of axiomatic statement. I just
have a difficult time envisioning another scenario being as
effective.

> Bruce Boston, the economic adviser on There.com, has been quite
> energetic (in comments on Terra Nova and elsewhere) in putting
> forward the opposite argument that allowing (and even encouraging)
> a secondary market (specifically in Therebucks) is vital to
> increase liquidity, which then increases the size of the primary
> market. He even ran the first private (non-employee) website
> buying and selling Therebucks to other There members to facilitate
> this.

I'm sure Bruce, as almost everyone else involved with There.com, is
a very smart guy. But There.com was a bit of a spectacular failure.

> Personally, the knowledge that I can sell my Therebucks on certain
> websites made it much easier to purchase them. Similarly, spread
> betting appeals to me where gambling at a bookmaker's doesn't. By
> extension, I'll be much more willing to spend $100 on a sword of
> doom if I know I can sell it again when I need that $200 platemail
> of shinyness (though admittedly the developer may not directly get
> my cash in either case).

Right, so once there is a sufficient supply floating about from
players selling who are leaving/have left the game, why would you
buy from the developer? Sure, some people will, but it seems
inevitable to me that the player churn would result in players
selling/giving their items to their friends, instead of those people
buying them from you. In our case, you can upgrade an artifact and
get 2/3rds of the current price applied to the upgrade, or 1/2 for a
lateral transfer. So the tax would have to be less than that, for
us, at least. So while you can't get "full value" back, you get some
of it back, but only if it's for your character. It's the whole
monopoly thing again.

> I would therefore like to know if there's been any research into a
> comparison between the positive impact of liquidity versus the
> negative impact of price undercutting, on developer profits. Would
> car manufacturers make more money if there was no second-hand
> market, or do the optimal rules for one market not transfer to
> another? I am not an economist, maybe someone can tell me what the
> current thinking is.

I really have no idea. I'm also not an economist and though I could
offer opinions they'd be without convincing proof...much like actual
economic theory. ;)

--matt
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