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Can the WoW economy tolerate a cartel?

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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.
A number of those points represent challenges to creating a druid cartel, but it's the final point that's the most damning. Druids aren't unique. Bears make for good tanks, but there are other classes out there who can tank. Other classes can heal. And my little shadow priest can certainly DPS better than any lousy boomkin can. Druid buffs are replicated by other classes. Remember that bring the player, not the class thing? That philosophy is why a druid cartel won't work.

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

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