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Perhaps the single most engrossing aspect of Gaia is its economics. Sometimes frustrating, sometimes rewarding, the interplay of the marketplace with the shops, the games, and even real life economics is already complex enough to make its workings a mystery to the average Gaian. In the balance of this essay, I shall attempt to explain a few of the dynamics that drive Gaia's economics.

Why are there common items on the marketplace? That should be easy to answer. People have gotten tired of them and wish to dispose of them while regaining as much of their original purchase price as possible. This would lead one to expect that there would be several pairs of Romani glasses on the market at any given time for 1799 gold, just a single gold less than the store price. In point of fact, at any given time there are few Romani glasses offered at less than the store price. Those that are offered below cost are usually snapped up by the resellers, those who have studied the market in detail and become expert in making gold from it. These resellers offer the glasses at a markup from the store price and make quite a nice amount of gold doing so.

So why does that work? There's no benefit to buying at a higher price than the store price! Why do they have customers? The answer is convenience. It can be frustrating and time consuming to look for a particular item in the shops. You may not know which shop to look in, and many of the shops have several pages of items offered. In the time it takes to "shop," you could post and poll for more gold than you saved by shopping. You may have a passion for one of the games and vastly resent taking the time away from it for something so mundane as shopping. Lastly, you could be a noob who doesn't even know the shops exist!

Should we decry the resellers? Absolutely not! There is no compulsion involved in the trade of gold for their items. Both parties enter into the deal willingly. To say that someone who offers Romani glasses at 2100 gold, 300 more than the store, is a robber is ludicrous. One could, and perhaps should, say his customers are as much to "blame" as he is. But the reseller is the object of scorn for producing some so-called "inflation." His customers have their reasons for buying at a mark-up. Those of you who are fishermen may understand when I say the time spent finding an item could fill a bucket of fish at Durem and easily be worth a couple hundred gold.

Which brings us quite nicely to the interaction of the marketplace with the games. If you are an old Gaian, you may remember the introduction of fishing and the first fish on the marketplace. Those of you who are newer to Gaia can recall the first flowers being sold or the even more recent Bachelor's credits. Whenever a new item appears, the price on the marketplace is astronomical. It is quickly brought down to more realistic levels by competition between the suppliers, but nevertheless the impression made by a guppy being offered (and sold!) for several thousand gold remains indelibly imprinted on one's consciousness. As time goes on, the prices for the game items stabilize at a level consistent with the difficulty of obtaining them by actually playing the game. The gaming items, therefore, represent the purest example of capitalism in the economics here. Goods are produced in the games by their devotees, and offered in the marketplace for sale. Those priced correctly sell. Competition between sellers keeps the prices low. Impulses to that market are the result of introduction of new dynamics by the Administrators, in the form of new fish or new fishing items. The market goes on, bringing those items into line slowly but surely.

Lastly, the interplay between reality and the Gaian economy. Donation items are the fuel for Gaia's existence in the real world. As such it is a driving force for the people who work at Gaia to bring out the most popular possible items. In the past, they have brought out some exquisite items, and some, well, to be kind, less than popular items. Recently, there have been some interesting items brought out... interesting in their relationship to very old (and nearly impossible to obtain) donation items. The Dark Halo directly imitated the original Halo, and worn in another fashion, the Devil Tail. As such, it was an immediate hit. People who could never afford an original can now get the new donation item. While it is tempting to believe that the Administrators did this to help relieve Gaian inflation, it is much more likely a response to real world influences and should be more appropriately compared to a movie sequel. The Angelic Microphone imitates several old items, notably Angelic Minis, DJ headphones and portable headphones.

The Elegant Veil imitates the Angelic Sash nicely. The response of the resellers to this item is of particular note. They have engaged in collusion. Now this is a practice which does bring the ire of the consumer upon the sellers. Sashes were being offered at just under 3 million. For a day, no Sashes were on the market. The following day all the Sashes listed were offered at just under 4 million. It remains to be seen if Sashes have become rare enough for this ploy to work. Certainly the Dark Halo had no effect on the price of the original Halo. It is my prediction that it will fail in this case because the scarcity of the Sash is not sufficient to overcome the desire on the part of sellers to make a sale and move on. Time will tell if I am correct... If you see me wearing a Sash after Christmas, I was right. If I'm wearing an Elegant Veil, my prediction didn't work out! Edit: As of January 1, 2007, there were 6 Angelic Sashes on the market with the lowest priced at 6.3 Million gold. Needless to say, I'm not wearing one.

There are many other things I could have discussed, but I hope this glimpse into the workings of the Gaian economy has been interesting, or at least illuminating to you. One thing I can guarantee is that the marketplace will continue to evolve and display more and more similarity to a real world economy. Enjoy the ride!

I also appluad what you have written. The economics, in Gaia can and do get confusing. I know in the beginning it was like that that for me. twisted

Nice. I liked your essay. It is very true.

Indeed, I agree with everyone! You did a great job. But I believe Sargun Peaceheart is right too. Overpricing is seen very often in the marketplace.

Overpricing, inflating, and scarcity is part of any economy that exists on this planet! There's nothing that can stop it. The only possible solution to say..inflation.. would be the manditory price drop of everything to under 100k or so. But even after that inflation and overspricing would still exist and therefore the prices would inflate once again.

I have to admit your dialogue on the economy of Gaia was outstanding and something that every mature Gaian (who can understand it) should read just for the interest of everyone!

I know when I sell an item in the Marketplace I first search for it and find out what the lowest buy price is. Then when I'm selling my item I either set it to 1 gold under that price or possibly more! The reason for this deflation is because I want to get rid of the item asap and by making it cheaper than others it will sell faster! But it's also because although I want gold I'm not as greedy or money-hungry as other who price a single ticket at over 4 billion gold!

However when I sell an item or items in the Gaia Exchange forum I usually just postmy inventory and let people pick the prices as long as they're reasonable. So far I haven't really been able to tell whether selling items in the forum or the Marketplace are more successful. I'd like to believe that the Marketplace sells better just because of the easy to use search and browse capbility. But then again, in the forums people can buy multiple items in one transaction and get better deals most of the time. Well regardless both are excellent ways of selling unwanted goods..and I'm actually curious to do a little research and find out which really does have a better sell rate...

Anyways thank you for inviting me to join this guild engineer-of-doomand I look forward to (possibly) having some in depth detailed disscussions about the economy of Gaia and possibly the connections to our real-world economy.

((Man that was a mouthful ^^ I don't even know if any of that made sense but hey..it was fun anyways!!))

I think that essay was very interesting, and even I learned a little something about Gaian economics. You can tell a lot of thought was put into it and Engineer has studied Gaia's economic growth very well. I applaud your hard work and effort, and encourage you to write more on this subject and similar ones. 3nodding

You’re essay explains a lot. What popped into my mind is that the marketplace can be compared to a convenience store. Some items will always be in stock, some items may or may not be there, and every once in awhile you’ll find a deal. But mainly things cost more because it is convenient.

Absolutely correct! Interestingly enough it looks as if right now we have a period of inflation despite the tightening of the gold given out. I think this is because other activities like posting and polling are not as interesting because of the lack of reward for doing so. However, as people realize that they don't have as much gold coming in, they will clean house and sell more of their inventory. So in the long run I'm expecting prices to come down.

However, I think it is prudent to wait and watch for a while to see before rushing into strange marketplace behavior.