Policy questions raised by virtual economies

Over the past decade the number and scope of so-called virtual economies has risen rapidly. Careful study reveals that the label “virtual”, while useful in a descriptive way, does not identify anything economically unique. Virtual economies tend to behave like any other economy and also increasingly interact in predictable ways with the so-called real economy. Yet, these interactions raise important and unresolved questions for law and policy. While most of the legal questions have been addressed by scholars, at this point, most remain unresolved by the courts. In addition, there is little systematic analysis of policy issues for virtual worlds. This paper identifies a number of reasons why the boundaries between the real and virtual worlds are eroding. In doing so, it addresses a few of the major policy issues faced by virtual world operators as the boundaries of their creations push against the real world. It also demonstrates how the developers of virtual worlds already behave as policy makers, and how their own actions continue to blur the boundary between themselves and national governments.