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

41 Pages Posted: 14 Jan 2002  

Edward Castronova

Indiana University

Date Written: December 2001

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 emigres 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.

Keywords: Information and Internet Services, Computer Software

JEL Classification: L86

Suggested Citation

Castronova, Edward, Virtual Worlds: A First-Hand Account of Market and Society on the Cyberian Frontier (December 2001). CESifo Working Paper Series No. 618. Available at SSRN: https://ssrn.com/abstract=294828

Edward Castronova (Contact Author)

Indiana University ( email )

107 S Indiana Ave
100 South Woodlawn
Bloomington, IN 47405
United States

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