Can the WoW economy tolerate a cartel?
by Fox Van Allen 
Mar 5th 2012 at 7:00PM
One of the coolest things about studying the WoW economy -- at least for me -- is that there are a lot of interesting parallels between the fictional game world of Azeroth and the real world. Today, we're going to examine a very curious topic we've never discussed here before: cartels.
Writer Nick sent in an email last week, posing a very interesting hypothetical question:
Let's say you have a max level druid, I use druid as an example as they can fulfil all roles. To the best of your ability, you contact as many druids as possible on the server, which ideally would spread via word of mouth, and recruit your server's entire populace of druids into a single guild, a druid cartel if you will. From then on, if ANYONE on your server wants a druid for their raid, arena etc. they pay a premium to the guild in which profits are pooled, and all benefit. Perhaps you could have a comprehensive price structure in which say an ilvl 397 druid is at a higher premium than an ilvl 384 druid.
Do you think this idea is at all feasible, and does it go against any Blizzard rules? I can't help but giggle at the potential repercussions of something like this on any given realm.
The great druid cartel
In economics, a cartel is an agreement between competing sellers or producers to try and increase the price at which they sell their goods. This agreement usually requires these sellers to either limit supply (to drive up prices through supply/demand mechanics) or increase prices.
You've probably heard of OPEC, the world's powerful oil cartel. It consists of 11 countries, all which are able to pull more oil out of the ground than each country can use itself. These countries meet regularly to agree on how much oil they should sell to maximize their revenues. OPEC countries aren't the only sellers of oil out there, but since they represent 44% of the world's crude oil production, their machinations have a major effect on the market.
In general, Western law considers cartels to be bad things. They represent a conspiracy against the public, a perversion of the free market process. Cartels simply aren't fair, or so popular opinion goes. In the United States, it is illegal to form a cartel. Internationally too, a number of regulatory bodies disallow this type of cooperation between competing firms. OPEC is still able to dominate the global oil market. Mostly because ... what are we going to do, not buy oil?
What you need for a cartel
That actually brings us to a pretty important point. For a cartel to work, you need to have certain conditions occur:
- A significant number of participators in the given market need to be part of the cartel. Nick's cartel won't work if only a few druids are on board with it. You'd need to get most druids on the server to join in -- enough to minimize the impact of those straggler druids who don't take part.
- The members of the cartel need to be loyal to the cartel. OPEC would fall apart if member states didn't agree to the quotas. This is a much more tricky requirement than it sounds. Participating in a cartel is a prisoner's dilemma situation -- member countries get more money exceeding production quotas so long as they're the only ones doing it. But if everyone does it, then the quota is meaningless and the cartel is powerless to keep prices buffed.
- The number of participants in the cartel matters. Part of what makes OPEC successful is that there are only a few countries out there who are net sellers of oil. It's easier to wrangle sheep when there are only a few sheep out there to wrangle.
- The good being offered needs to be unique. OPEC is a success at what it does because the alternatives to oil are more expensive or less convenient. You can't have a ham sandwich cartel, because people could just go around eating turkey sandwiches instead. Yeah, yeah, I know -- they're not the same. But no one needs a ham sandwich.
That said, another type of cartel might work, at least in theory ...
Healers for sale (or rent), PST
Last year, a new guild began popping up on my server. Someone was wrangling up healers best they could, recruiting them into a for-profit guild. It was a simple idea: Instead of the guild's members queuing for random heroics, they'd instead sell their services via trade.
This too was a cartel -- the more healers get recruited into this guild, the longer queues would be for the rest of us. Healers would be creating a market and, at the same time, taking cartel-style control over it. But could this type of guild stand the test of time?
The answer, it turns out, was no. And the reasons provide good instruction as to why these kinds of guilds and cartels just aren't built to stand the test of time.
There's no real motivation to hold a cartel together. In the real world, cartels make their participants money, and lots of it. Money is a damn powerful motivator -- to quote Cabaret, "money makes the world go 'round." WoW gold pales in comparison. It's just not worth enough. Participants in the cartel have to sacrifice their own time in order to make money, staying out of a queue and delaying their gameplay.
The second problem: loyalty. OPEC struggles to maintain agreement between its member states. Saudi Arabia was notorious for (quietly) selling the United States more oil than its quota allowed it to. Now, consider this: If world countries find it difficult to find agreement and stay loyal to an agreement, what hope does a guild have who relies on the efforts of, in some cases, teenagers and trade chat trolls?
Third, there are just too many players out there to make a healer cartel work. WoW has 10 million subscribers and an even larger number of individual characters. That's a lot of people to wrangle into an agreement. Even if you're talking about one individual realm, you're still looking at the need to sign up tens of thousands of players. It's hard enough playing the prisoner's dilemma game with two people; it's damn near impossible playing it with 50,000.
Maximize your profits with advice from Gold Capped. Want to know the very best ways to earn 10,000 gold? Top gold making strategies for auctioneers? How about how to reach 1 million gold -- or how one player got there and then gave it all away? Fox and Basil are taking your questions at fox@wowinsider.com and basil@wowinsider.com.
Filed under: Economy, Gold Capped
Reader Comments (Page 1 of 2)
Shade Mar 5th 2012 7:11PM
Beyond making me think, this column made me smile three times:
1) The music
2) Discussing cartels reminded me of college, which I graduated from almost a year ago (is this what being old feels like?)
3) You stuck a musical theater reference into a WoW news site article revolving around the in-game economy.
I'd be interested in a follow-up article revolving around auction house cartels - pretty sure there's a guild on my server focused entirely around controlling as many high-volume markets as possible. There might actually be a Gold Capped on the subject, but I'm feeling all sorts of bleh at the moment so I can't remember.
--@SyntheticAether
matt Mar 5th 2012 7:58PM
talk about feeling old, who is cartel??
Hob Mar 5th 2012 7:58PM
Re: #2
Well, your mileage will vary.
For me, I started feeling old when:
* I realized that I could be the dad of any of the late-teen/early-20's cashiers at my local supermarket.
* my pop-culture references were greeted with the same blank stare I used to give my parents when they made lame, ancient references to movies, TV shows, and songs that no one in my generation had ever seen or heard.
* a long, animated conversation about "joints" was about pain and inflammation.
http://s403.photobucket.com/albums/pp113/blink617/?action=view¤t=zz_farside.jpg&sort=ascending&call=1
raingod Mar 5th 2012 8:30PM
@Hob, #3 reminded me of a conversation I had about 12 years ago. I was 34 at the time and ran into an old high school friend. I was recovering from surgery from a ruptured colon, and he was recovering from a stroke, brought on by a car accident. Over lunch we spent the majority of time talking about our health, medical insurance, meds and I started laughing. He asked what was funny and I said, "We used to talk about sex, drugs and music, now its health, insurance and medication."
I'd go on, but my old fart home has jello I don't want to miss.
pinteresque Mar 5th 2012 8:44PM
old? hahahahahahahahahaha.
hahahahaha.
haha.
Just you wait, kid.
Shade Mar 5th 2012 8:56PM
@matt Cartel was (is, technically) a band who had one big single in the mid-2000s. I hadn't heard the song Fox posted; I just recognized the name. Don't feel too down about that one.
@hob Seeing people younger than me working at stores/restaurants freaked me out for about two years after it started happening regularly. Justin Bieber gave me a "what am I doing with my life" crisis on and off for a weekish before I decided not being a little douche is more important than having tons of money.
@raingod Ask them to put vodka in the next batch, then let the mixture set in those little water cups they give you with pills. Jello shots!
@pint Hahaha yeah, I guess I should clarify that I recognize that I'm still young, but little moments (like this one) are beginning to creep in every few months or so. The first was back in high school when I started being able to say "It's been a decade since I _____" - and that was less 'old' than 'wow that was over half my life ago' I think in general people feel less young when they make life transitions and can start 'looking back' on longer periods as a single condensed experience.
nosoup4u76 Mar 5th 2012 9:11PM
My wife makes PHENOMENAL jello shots. They're not the crappy kind that sit in the little plastic cups that you have to run your finger around the edge to down either. They're the jello jiggler type and they are awesome. Her own recipe. I keep trying to get her to get a liquor license and sell them over this new-fangled interweb.
Excuse me, I have to go yell at the squirrels to get off my lawn now.
nosoup4u76 Mar 5th 2012 9:14PM
Come, join the cartel... we have jello shots!
jfofla Mar 5th 2012 9:35PM
I graduated college in 1980.
And yes, had to walk uphill both ways, in the snow.
Well, it was Ann Arbor, so of course there was snow.
spikepoint Mar 5th 2012 7:13PM
I loved that first Cartel record SO MUCH.
... an in-game cartel? That would kill all of my alts' back accounts, lol.
Shrikesnest Mar 5th 2012 7:17PM
Excellent points as always, Fox. Real-world cartels are most often composed of very powerful CEOs and ironclad dictators who are absolutely vital to the production or functioning of what they're controlling, and only a handful of them at that. There's no way to monopolize druids or healers; anyone can make one for virtually no cost. And there's no way you're going to get every single healer or druid or whatever on even a small server to come to terms with you; you're not dealing with a few dozen dictators who all stand to gain, but a few hundred or thousand people.
(What follows is an anecdote about my time in high school. Feel free to skip the rest of the post if you're not in for that sort of thing.)
I remember the first lesson I learned about cartels. I was a senior in high school, taking my first economics class. I had already read two college-level economics textbooks, and I had a bit of a chip on my shoulder. We were playing a classroom game where half of us had a "goods" card worth a certain amount and the other half had a "money" card worth a certain amount; the idea of the game was for the players with "goods" to trade to the players with "money" and make the best deal we could.
I had a pretty low-value "goods" card. Being kind of an ass at that age, I rounded up the other "goods" holders and attempted to form a cartel, trying to get my fellow classmates to take no less than a certain amount and leave the low "money" holders out in the cold (there were more money cards than goods cards). To my teacher's credit, he just let me set all this up. I could see him grin with amusement as my fellow cartel members sold me out in less than thirty seconds, taking less than we had agreed on in order to guarantee a decent profit (I was asking for quite a lot; I'm not even sure the game would have been completable if people had stuck to my rules). It was a pretty big teaching moment. People aren't going to forego a decent profit in the hopes that they'll make an obscene profit.
Markets are complex. The amount you want to set for your cartel is going to be well above the threshold that its individual members are willing to sell their services for (or else why bother having one?) and well below what others think their services are worth. You'll have a similar disconnect with the buyers. The whole point of capitalism is that, left to their own devices, people will set their own price points wherever they're comfortable. As Fox said, without some way to ensure loyalty you're going to be doing a lot of fighting against that sort of natural law, and it's a fight you can't win in these circumstances.
byronius_prime Mar 5th 2012 7:29PM
Very interesting article.
I highly doubt a "druid cartel" would work. As said, there's other classes who can fill their roles. A healer/tank cartel would certainly work better. Got me thinking though. What about a cartel of auctioneers? People who could unite their resources to dominate a servers economy and split the profits - perhaps a collaboration between big time farmers, and experienced auctioneers.
Boobah Mar 5th 2012 8:39PM
The problem is catching defectors. OPEC (almost) works because all the members sell on an open market; everybody else in OPEC can see when somebody else in the cartel makes a sale and for how large the sale is. When somebody breaks the rules, everybody else gears up their production which lowers the price.
In the meantime, your AH cartel membership has the power of alts. Iran can't pretend that it's actually Persia undercutting the cartel by fractions of a dollar on the barrel, and nobody believes that Babylon and Sumeria aren't really Iraq, but there really isn't any way to prove that Bankofzerg is breaking the cartel using his alt Zergbank, which is silly because his cartel-breaking alt is Mrmumblepins.
Ashlar Mar 5th 2012 7:30PM
You neglect one critical component of cartels - barriers to entry. Since anyone can roll a druid, there is no way to keep the supply low.
GhostWhoWalks Mar 5th 2012 7:33PM
On the same subject of the article, what are people's thoughts on a mercenary guild? Like, a guild of skilled players that "hire" themselves out to players who need, say, an unbeatable tank or an stoppable DPS? Has there been any precedent for this sort of thing?
GhostWhoWalks Mar 6th 2012 3:12AM
Hahaha...fairly sure that's supposed to be "unstoppable"...WTB an edit button...
Luke Mar 6th 2012 3:43AM
There have been several "hit squads", specifically tailored to hunt down players and kill / grief them.
I've often thought it would be cool to have an entire guild dedicated to making enjoyable random groups. Which would pretty much mean an entire guild of tanks and healers with the intent of picking up random dps and running them through dungeons of all levels.
The idea would bring back twinking, in a way as the players would need characters at all level ranges maxed out with the best gear and enchants available to that level.
Each character would be in a sense an RP character. Everyone would have dialogue and exchanges in a more or less scripted sense, with room for more creative folks to ad lib.
The runs should be live streamed.
The people who luck into the group can stay for two short dungeons but must leave after that to make room for new people. Longer dungeons like those in black rock or dire maul would be limited to a single run.
This idea however is just for fun with no intentions of making a profit.
minduim Mar 6th 2012 9:11AM
In 2012 a crack commando unit was sent to Stockade by a military court for a crime they didn't commit. These men promptly escaped from the maximum security Stockade to the Stormwind underground. Today, still wanted by the government, they survive as soldiers of fortune. If you have a problem, if no one else can help, and if you can find them, maybe you can hire the A-Team.
Mir Mar 5th 2012 7:34PM
I actually ran a very successful cartel of sorts back in Vanilla/TBC. On our realm there were only 4 guilds on our faction with any decent progression (and by decent I mean finished T2 and attempting T3) so getting a dozen or so raid geared tanks to agree to a dungeon run price was fairly easy. It was alot different back then though. Now that we have multirealm RDF such a thing just won't work.
Also, gearing up is sooooooo much easier now, that if a cartel ever did pop up, people would just make a new toon of whatever type the cartel was made up of. It takes planning and a bit of help, but it is completely possible to go from level 1 to raid ready in 24 hours.
qwerty31 Mar 6th 2012 3:22PM
"...but it is completely possible to go from level 1 to raid ready in 24 hours."
I bow to your godliness.
Seriously, though, a month sounds more realistic? Maybe 2-3 weeks, if you're hardcore, and depending on what your threshold for "raid-ready" is, but I can't imagine anybody reasonably doing this in less than a week.