I'll have another post in my series of posts on economics without scarcity soon, but there's something going on in Second Life that highlights one of the issues when there's no scarcity. We were disappointed a few years ago when the creators of Second Life, Linden Labs, said that virtual goods in Second Life should be treated exactly as if they were real goods outside of the game. While it brought in all the problems with legal systems in the outside world, it also created a new problem involving a lack of scarcity and virtual goods. The problem with any such virtual good is that it isn't really scarce. It's artificially scarce by the design of the game. That's a recipe for trouble, and it seems that said trouble has just introduced itself to Second Life in the form of an automated bot that will automatically copy anything in Second Life. Out in the real world, you'd never have an issue like this with tangible products -- because there would always be a scarcity issue where creating a copy would at least entail a real marginal cost. Not so in the virtual world -- which is upsetting people who were tricked into believing that Second Life really was like the outside world in terms of its economics. The fact that any item can be copied, suggests that the economies of these worlds are a lot less stable than what some folks would have you believe. In the meantime, people are trying to deal with it by bringing those bad real world laws directly into the virtual worlds, with some threatening to use the DMCA to stop the copybot from copying items in Second Life -- a move foreshadowed by the claim of copyright infringement when someone copied a "magical sword" in a different online game. For all the hype virtual worlds like Second Life and their "virtual economies" have gotten, it's worth remembering that the lack of real scarcity in these worlds is going to impact the economics in a big way.
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