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World of Warcraft Antitrust

By Hanno Kaiser

David Friedman notes that:

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 cartel?a 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 Director?s analysis, reflected in McGee?s 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.

For a dose of reality regarding cartels, any of John Connor’s recent articles will do.

Full post as published by Antitrust Review on January 10, 2009 (boomark / email).