Capitalising the Network Externalities of New Land Supply in the Metaverse

Kanis Saengchote, Voraprapa Nakavachara and Yishuang Xu

No 203, PIER Discussion Papers from Puey Ungphakorn Institute for Economic Research

Abstract: When land becomes more connected, its value can change because of network externalities. This idea is intuitive and appealing to developers and policymakers, but documenting their importance is empirically challenging because it is difficult to isolate the determinants of land value in practice. We address this challenge with real estate in The Sandbox, a virtual economy built on blockchain, which provides a series of natural experiments that can be used to estimate the causal impact of land-based of network externalities. Our results show that when new land becomes available, the network value of existing land increases, but there is a trade-off as new land also competes with existing supply. Our work illustrates the benefits of using virtual worlds to conduct policy experiments.

Keywords: Metaverse; NFT; Hedonic Land Price; Network Externalities; Natural Experiment (search for similar items in EconPapers)
JEL-codes: G12 G14 R30 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2023-03
New Economics Papers: this item is included in nep-des and nep-ure
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Citations: View citations in EconPapers (1)

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