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Examining the effects of network externalities, density, and closure on in-game currency price in online games

Xuexin Xu (Nanyang Technological University, Singapore, Singapore)
Xiaodong Yang (Nanyang Technological University, Singapore, Singapore)
Junhua Lu (Zhejiang University, Hangzhou, China)
Ji Lan (Zhejiang University, Hangzhou, China)
Tai-Quan Peng (Department of Communication, Michigan State University, East Lansing, Michigan, USA)
Yingcai Wu (Zhejiang University, Hangzhou, China)
Wei Chen (Zhejiang University, Hangzhou, China)

Internet Research

ISSN: 1066-2243

Article publication date: 7 August 2017

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1012

Abstract

Purpose

Massively multiplayer online role-playing games (MMORPGs) create quasi-real social systems in which players can interact with one another, and quasi-real economic systems where players can consume and trade in-game items with virtual currency. The in-game currency price, an important indicator of a virtual economy, is highly contingent on players’ behavioral interaction in MMORPGs. The purpose of this paper is to adopt a network perspective to examine how topological characteristics of social networks in an MMORPG, namely, network externalities, density, and closure, would exert impacts on the in-game currency price.

Design/methodology/approach

Players’ behavioral data were collected from a popular MMORPG in China on a weekly basis for 52 weeks. With a time series analytical approach, the empirical model for the price function of in-game currency was estimated with vector autoregression.

Findings

The results show that the number of core avatars and network density are positively associated with in-game currency price, while network closure has a negative effect on in-game currency price. However, in-game currency price is found to have no significant relationship with the trade volume of the currency.

Originality/value

This study fills in an important research gap by investigating factors influencing the in-game currency price of MMORPGs from a network perspective, which contributes to the existing literature of network effects and advances our understanding about how players’ interaction will influence the dynamics of a virtual economy. The findings could offer useful insights for online game companies to better understand their players’ social interaction and consumption behavior.

Keywords

Citation

Xu, X., Yang, X., Lu, J., Lan, J., Peng, T.-Q., Wu, Y. and Chen, W. (2017), "Examining the effects of network externalities, density, and closure on in-game currency price in online games", Internet Research, Vol. 27 No. 4, pp. 924-941. https://doi.org/10.1108/IntR-07-2016-0201

Publisher

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Emerald Publishing Limited

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