Auctioneers stabilize the economy

I have written two previous posts about RMT and my views on the impact of gold-farmers already, but these have been just my own observations.
Post One
Post Two
Metatron also wrote a concise post that explains the buyer=>farmer=>auctioneer gold cycle.

I decided to investigate the matter further and to my surprise I found a lot of information on the matter.
I started with the WoWWiki and Wikipedia articles about gold farmers and ended up reading a lot of articles in various newspapers, blogs, research papers, and even ordered a book on the topic which I will review as soon as it comes in the mail.

The interest in MMO economies in relation to real world ones started in 2001, when Edward Castronova published a paper titled

Virtual Worlds: A First-Hand Account of Market and Society on the Cyberian Frontier. In the paper he claimed that EverQuest had a GDP higher than China and the currency was stronger than the Yen. Since then, there have been many more studies done on the subject and I've found reading them to be quite intriguing.

Another paper on the subject that I read was Current Analysis and Future Research Agenda on "Gold Farming": Real-World Production in Developing Countries for the Virtual Economies of Online Games This one was less about the effects of gold farming on the game, and more on how and why the gold farming phenomenon exists. I'll leave it to you to read the whole thing, but I wanted to quote a few interesting parts.

"Economics sees value wherever humans decide that some construct of theirs has utility but is scarce. Synthetic world goods have utility and are scarce; thus they have value that can be measured in terms of real dollars."

The structure of gold farming firms:

"Three people do research and find the most efficient way of gold farming and power leveling, three people who are good at English do marketing and the rest are divided into four groups, the best gold farmer as group leader, farming gold."

Beyond the basic "gold farmer" epithet are many different roles that gold farmers may
play in-game (expanded from Davis 2007 and Zonk 2007):
• Hunter: these players kill non-player characters/"monsters".  They will then take
any currency dropped from the kill, and sell valuable dropped items in-game for
more currency.
• Fighter: helps the hunter to kill NPCs but does not take the drop.
• Gatherer: undertakes a non-fighting role in the game to gather resources that can
be sold for in-game currency, such as mining or wood-cutting.
• Producer: undertakes a non-fighting role in the game to manufacture items that
can be sold for in-game currency, such as blacksmithing or potion-making.
• Banker: stores assets; may also "mule" the assets from one area of the game to
another (e.g. a bank or trading location).
• Dealer: delivers the currency or item to the purchaser in the game.
• Marketer: "barkers" who generally advertise gold farming services to other
players; "peddlers" who contact individual players with advertising messages.
 Leveller: takes over a purchaser's character and plays it in order to raise it levels
(or plays a firm-owned character, raises its levels and then sells that account).
In practice, a gold-farmer's avatar may play more than one of these roles (e.g. both
marketer and dealer: Bell 2006).  Gold farmers may play these roles alone or work in
groups (e.g. Jin 2006d, Dibbell 2007).  Some of these roles (e.g. barker) seem more
likely to be automated than others.

The paper then goes into the profitability of farming gold, wages and working conditions of the workers.

The general conclusion of what I read seemed to be that "The real problem is the perception of gold farming, not the fact of gold farming" and that game companies don't do much to combat it for various reasons(all related to their profits). For one, there is a good chunk of players who will quit if they can no longer buy gold. Secondly,

"Size of effect: there are few signs that gold farmers or gold buyers have become the dominant
force in game economies.  Thus the effect they – as opposed to regular players – have on the
virtual economy will be fractional; possibly even marginal.  How regular players behave
economically matters more. "

Regular players obviously implies those who love to play the AH extensively. A regular player will pay the cost of a specific item and move on, but those of us who enjoy the buying/crafting/reselling game are the ones who control the what happens with the economy on our servers and keep the supply of an item in check, as to avoid deflation. Some of us, even find clever ways with dealing with oversupply.