by Stacy Jones on Jan 12, 2009
What would you say if I told you an Economics Professor actually found a way to teach his class about the economy by using examples from World of Warcraft (WoW)? Well David Friedman an Academic Economist has done just that. By referencing the economy in WoW he is able to use examples of economic workings of a system without an antitrust law where players will often times try to corner a market or even create a cartel to monopolize it. In a recent blog he goes into detail on how he uses this method and why the WoW economy is such a good model for study.
There is no antitrust law in WoW, which makes it a good place to observe collusive behavior by sellers. My wife, who spends more time in the auction house buying ad selling than I do, has observed both an attempt to corner a market and an attempt, at least partly successful, to form a cartela cartel she was invited to join. Her refusal was met by a threat to drive her out of the market by underselling her. The organizer of the cartel had apparently not read Aaron Directors analysis, reflected in McGees classic article on the myth of predatory pricing; it had not occurred to him that if he was selling, at an artificially low price, ten times as many gems as the interloper, he was also losing money ten times as fast. It took only a few days for him to discover the flaw in the strategy and abandon it.
Read the full Azeroth economic lowdown.