Virtual Economy Research Articles

Research on the Relation between Real Economy and Virtual Economy

Research on the Relation between Real Economy and Virtual Economy

Fintech in Europe: Promises and Threats

Europe's high pre-existing level of financial development can partly account for the relatively smaller reach of fintech payment and lending activities compared to some other regions. But fintech activity is growing rapidly. Digital payment schemes are expanding within countries, although cross-border and pan-euro area instruments are not yet widespread, notwithstanding important enabling EU level regulation and the establishment of instant payments by the ECB. Automated lending models are developing but remain limited mainly to unsecured consumer lending. While start-ups are pursuing platform-based approaches under minimal regulation, there is a clear trend for fintech companies to acquire balance sheets and, relatedly, banking licenses as they expand. Meanwhile, competition is pushing many traditional banks to adopt fintech instruments, either in-house or by acquisition, thereby causing them to increasingly resemble balanced sheet-based fintech companies. These developments could improve the efficiency and reach of financial intermediation while also adding to profitability pressures for some banks. Although the COVID-19 pandemic could call into question the viability of platform-based lending fintechs funding models given that investors could face much higher delinquencies, it may also offer growth opportunities to those fintechs that are positioned to take advantage of the ongoing structural shift in demand toward virtual finance.

Talent Allocation and Total Factor Productivity: With a Discussion on the High-Quality Growth of China’s Real Economy

The tendency of talent allocation Shifting from Real to Fictitious” is an important issue faced by the current Chinese economy （Li, et al., 2017; Huang, et al., 2017; Liu, et al., 2018）. According to the one-percent national sample census in the year of 2005 and 2015, the average years of education for manufacturing employees were 9.37 years and 10.26 years respectively, with those with junior middle school education accounting for 55.83% and 52.42% respectively. At the same period, the average years of education for those employed in the financial industry are 13.45 years and 14.27 years respectively, and those with higher education account for 55.11% and 69.63% respectively. The existing literature discusses talent allocation mainly from the perspective of government-enterprise （Murphy, et al., 1991; Li and Yin, 2014, 2017; Li and Nan, 2019）, but there has been a new change in the allocation of talents in China. In addition to public administration departments （government）, financial industry, real estate industry and other virtual economy that generate money with money” are also preferred occupation of the human capital groups, which is exactly the problem that the academic world cannot ignore. Given this background, this paper tries to answer the following questions: Has talent allocation been excessively biased towards the financial industry? If so, how will talent allocation affect Total Factor Productivity （TFP）? Before conducting the empirical regression, we construct a sample theoretical model to demonstrate the nonlinear effect of talent allocation between finance and manufacturing industry on TFP and its mechanism. Then, in the empirical part, we use the one-percent national sample census data and China Industrial Enterprise Database to establish the prefecture-level talent allocation indicator and empirically test the impact of talent allocation on the TFP of enterprises. We find that talent allocation and TFP show an inverted U-shaped relationship on the premise of controlling city and enterprise variables. We calculate the inflection point of talent allocation between financial industry and manufacturing is 1.10. For 283 prefecture-level cities in China, there are 273 cities whose talent allocation has been excessive biased towards the financial industry. And this phenomenon has significantly reduced the TFP of manufacturing. Considering the problem of omitted variables, reverse causality and measurement error of explanatory variables, and using the real estate-manufacturing talent allocation for regression and placebo testing, we find that the main conclusions remain established. If talents are efficiently allocated to manufacturing, Chinese manufacturing TFP can continue to grow by 2.7%, which is economically significant. In addition, heterogeneity analysis shows that there is a significant difference in the impact of over-allocation of talents on the high-tech manufacturing and non-high-tech manufacturing, and the optimal talent allocation of the high-tech manufacturing shifts to the left. This paper may have the following contributions: First, it provides empirical analysis to study the relationship between talent allocation and TFP from a new perspective. Some literature has recognized that talent allocation may be biased towards virtual economy sectors, but all of their analysis is descriptive. Second, it finds that China’s limited human resources are over-biased to the virtual economy sector which is represented by the financial industry. The policy implication is that, to promote real economy, policy-makers should attach great importance to this issue and adjust the manufacturing talent development plan properly.

Supply-side structural reform from the perspective of political economy

Purpose Deepening supply-side structural reform is the main objective of the economic work since the Chinese economy entered a new stage of development. By adopting the fundamental principles and methodologies of Marxist political economy, the authors can provide clarifications on the three basic theoretical issues concerning the supply-side structural reform. The paper aims to discuss these issues. Design/methodology/approach First, the essential starting point for understanding the supply-side structural reform is the primacy of production, as well as the organic connection between production and consumption in social reproduction, rather than the supply and demand as superficially seen in exchanges. By identifying the right starting point, the authors can avoid alternating between demand and supply management, and between liberalism and interventionism. Findings Structural problems, which are closely related to the institutional structure of production and the purpose and nature of production, cannot be solely attributed to the imbalance caused by market failures. Chinese economy has suffered prolonged structural contradictions and structural problems. Originality/value To decide whether the financial and the real estate sectors are real economy or virtual economy, the key is to examine whether the monetary capital used in financial activities and real estate commodity (capital) go through the capital circulation process of from monetary capital to productive capital and further to commodity capital, and whether the capital gain is generated by the value appreciation of capital or the value transfer and distribution as a result of the transfer of ownership. With its emphasis on developing the real economy, the supply-side structural reform should foster both development of manufacturing, and parts of financial and real estate sectors that are the real economy.

ЩОДО ВПЛИВУ ЦИФРОВОЇ РЕВОЛЮЦІЇ НА ЕКОНОМІКУ ТА ЛЮДИНУ: ЕФЕКТИ ЦИФРОВІЗАЦІЇ

In the article we showed that the" digital revolution " had little impact on the development of the economy, as shown by the analysis of data on labor productivity growth (1995-2000) and multifactor productivity in the United States (2010-2015), a comparative analysis of incoming and outgoing flows of the IT sector (1987-1998). ICT spending in the world as a whole is huge and growing faster than GDP. However, ICT contributes to economic growth only upon reaching the minimum threshold of infrastructure development and the return of high cost requires growth in sales, which is problematic in the downturn in the global economy and not feasible for many countries.The largest IT corporations receive dividends from the development of the "digital economy". At the same time, most of the revenue of technology giants is associated not with the real, but with the virtual economy, and the value of their income is comparable to the GDP of the largest countries in the world by GDP. The dominance of IT corporations can lead to the fact that the whole new economy will be managed only by them.The role of technology in the modern world is changing, and if the third technological revolution was aimed at changing the economy, the fourth-a profound change in man and therefore it is more appropriate to call humanitarian and technological.It is a process of global and deep changes of the person and society on the basis of NBICS technologies which gluing basis are digital for the purpose of cardinal reorganization of the existing social and economic order. In the new system, the nature of benefits is concentrated not in the field of improving technical and economic processes, but in the field of behavior management.Even now, under the influence of digital technologies and modern culture, which is confirmed by many studies of the digital generation, deep changes are taking place with the human psyche. And this is the basis for the management of human behavior in all spheres, including in the economy, along with the process of algorithmization of all aspects of life in the modern world. But this is a dead end for the development of society and the traditional economy.

Withdrawal right waivers for in-game currency under EU law

Consumers in the EU have a discretionary withdrawal right for online transactions. For 14 days (or longer, if they have not been properly informed of this right), they can cancel the contract and claim a refund. This right is generally mandatory and can only be contractually waived in advance in contracts for the provision of digital content. German courts have handed down a series of judgments confirming that virtual in-game currency qualifies as digital content for the purpose of this exception and clarifying the conditions under which such waivers can be obtained. Most decisions indicate waiver language can be integrated into the purchase flow prior to the final purchase decision, with some courts requiring a separate checkbox. One decision would force providers to implement separate consent mechanisms after the consumer has made the purchase but before the virtual currency is made available to them. In any event, implementing the requirements set out by German courts also requires the cooperation of distribution platforms.

Analysis of and Theoretical Reflections on China’s “Excessive De-Industrialization” Phenomenon

Industrialization is a long-term process of spiral transformation and upgrading. In a broad sense, industrialization can be divided into two stages, i.e. shallow industrialization and deep industrialization. The first stage refers to a process of expansive industrialization aiming to increase the proportion of industry, while the second stage refers to a process of contractive industrialization centered on improvements in industrial quality and competitiveness, to which the shallow industrialization is transformed and upgraded. In fact, the industrialization stages divided according to traditional theories, i.e. early stage, middle stage and late stage, are only for achieving the goals of shallow industrialization, instead of ultimately completing the developmental tasks of industrial economy. The transforming and upgrading from shallow industrialization to deep industrialization is an essential stage for a major country to enhance its development quality and competitiveness of industrial economy. So far, China has not fully industrialized. In the context of unbalanced and inadequate industrial development, China has seen a rapid decline in the industrial value-added and employment proportions in recent years, prematurely showing the features of rapid excessive de-industrialization in all respects. China’s current excessive de-industrialization is not only attributed to the impulse of rushing into mass actions in industrial upgrading, but also resulting from the combined effects of multiple factors such as surging factor prices and overcapacity at the current stage, exerting serious negative impacts on China’s economic growth, productivity improvement, development of modern service industry and transfer of agricultural labor force. In a long period of time ahead, considering the need to improve the quality of industrialization and the relationship between industry and services, real economy and virtual economy, the industry dominated by advanced manufacturing industry is still China’s major impetus for driving the medium–high rate of sustained and stable economic growth. Advancing deep industrialization remains a long and arduous task. Therefore, it is required to get rid of the misunderstanding caused by traditional theories and thinking, reconsider the importance of industrialization, implement the strategy of deep industrialization and prevent excessive de-industrialization. The specific measures include: expedite the promotion of deep industrialization in the developed regions of Eastern China, build a group of advanced manufacturing bases in Central and Western China and facilitate an in-depth integrated development of advanced manufacturing industry and modern service industry.

A hybrid combinatorial approach to a two-stage stochastic portfolio optimization model with uncertain asset prices

Portfolio optimization is one of the most important problems in the finance field. The traditional Markowitz mean-variance model is often unrealistic since it relies on the perfect market information. In this work, we propose a two-stage stochastic portfolio optimization model with a comprehensive set of real-world trading constraints to address this issue. Our model incorporates the market uncertainty in terms of future asset price scenarios based on asset return distributions stemming from the real market data. Compared with existing models, our model is more reliable since it encompasses real-world trading constraints and it adopts CVaR as the risk measure. Furthermore, our model is more practical because it could help investors to design their future investment strategies based on their future asset price expectations. In order to solve the proposed stochastic model, we develop a hybrid combinatorial approach, which integrates a hybrid algorithm and a linear programming (LP) solver for the problem with a large number of scenarios. The comparison of the computational results obtained with three different metaheuristic algorithms and with our hybrid approach shows the effectiveness of the latter. The superiority of our model is mainly embedded in solution quality. The results demonstrate that our model is capable of solving complex portfolio optimization problems with tremendous scenarios while maintaining high solution quality in a reasonable amount of time and it has outstanding practical investment implications, such as effective portfolio constructions.

Türkiye’de Muhasebe Mesleğinin Geleceği

<p class="ql-align-justify">When the future of the accounting profession is mentioned, it is generally thought that technological developments will reduce the need of labor force. This is correct for many aspects. However, the future of money is more important than this issue. Each coinage and paper money system has created a distinctive culture that differs significantly from all previous systems.&nbsp;In recent years, with the effect of digitalization and technological developments, the whole world is in the third stage of the history of money: the age of electronic money and the virtual economy. The integration of computer usage into our lives, the acceleration of globalization and the neo-liberal policies adopted by developed countries have increased the need for a common electronic currency. With the rise of electronic money, it is inevitable that society will undergo radical and wide-ranging changes. Electronic money will bring fundamental changes to political systems, the nature of trade organizations and class organization. <p class="ql-align-justify">In this study, the historical development of monetary systems is explained and the effects of inflation on the current monetary system are examined.&nbsp;The way in which the electronic money system affects economic and social life is discussed and suggestions for the future are given.&nbsp;There are no journal entries without money, no accounting without journal entries, no financials without accounting, no companies without financials, no economy without companies, no life without economy.&nbsp;

How instability in virtual economies of mobile digital games drives and ruins profit

The digital gaming business has changed in the last years. Digital games are no longer just products. They developed into services. People play games not only on a stationary device, but on mobile devices, too. The change of gaming devices also had an impact on game design. Competition between mobile digital games mostly takes place at a download price of zero. Today the Freemium monetization method is the dominant monetization method. Players of digital games often have to go through a core loop by repeating the same tasks inside the game. The stability of the virtual economy inside the game affects the game’s core loop. This paper discusses the role of instability in virtual economies in the context of core loops. A small instability inside a virtual economy can increase revenue of a digital game. Players tend to stay in a game because of sunk cost fallacy. If instability inside a virtual economy happens for a too long time players will quit playing and revenue will decrease.

Paying for loot boxes is linked to problem gambling, regardless of specific features like cash-out and pay-to-win

Loot boxes are items in video games that may be bought with real-world money but contain randomised contents. Due to similarities between loot boxes and gambling, various countries are considering regulating them to reduce gambling-related harm. However, loot boxes are extremely diverse. A key problem facing regulators is determining whether specific types of loot boxes carry more potential for harm, and should be regulated accordingly.In this study, we specify seven key ways that loot boxes may differ from each other: They may involve paid or unpaid openings; give opportunities for cashing out; allow gamers to pay to win; involve the use of an in-game currency; feature crate and key mechanics; show near misses; and contain exclusive items.We then use a large-scale preregistered correlational analysis (n = 1200) to determine if any of these features strengthen the link between loot box spending and problem gambling. Our results indicate that being able to cash out, showing near-misses, and letting players use in-game currency to buy loot boxes may weakly strengthen the relationship between loot box spending and problem gambling. However, our main conclusion is that regardless of the presence or absence of specific features of loot boxes, if they are being sold to players for real-world money, then their purchase is linked to problem gambling.

Social Influence and Monetization of Freemium Social Games

One fundamental economic challenge in social gaming is how to monetize players. We address this problem from the lens of social influence. Specifically, we examine how players’ paying behaviors in a social game are associated with their pure friends and Simmelian-tie friends. Analyzing a comprehensive social game dataset provided by Tencent.com, we find that the cohesion effect emanating from players’ direct connections in the social gaming network exhibits positive impacts on players’ willingness to pay. Surprisingly, the cohesion effect of pure friends is found to be significantly stronger than that of Simmelian-tie friends, contrary to the common findings in the literature. These new findings have direct implications for companies tasked with designing social games or gamification systems and, more broadly, to help better understand the mechanism behind the microscopic economic behavior of individuals in a virtual economy.

Re-understanding of the Marxist Monopoly Capital Theory in the New Period

Marxist monopoly capital theory originated from Marx’s monopoly thought in “Capital” and other works. On the basis of predecessors, Lenin inherited and developed Marx and others’ understanding of monopoly capitalism and formed a more systematic Marxist Monopoly capital theory. In the new era, monopoly capitalism has shown new characteristics: the globalization of monopoly capital has deepened; the new carrier of monopoly organizations - multinational corporations comprehensively control the global economy; antitrust with the monopoly. At the same time, the new stage of monopoly capitalism has also exposed new contradictions: the polarization between the rich and the poor is serious; the hollowing out of the real economy and the excessive expansion of the virtual economy; overproduction and insufficient demand.

Research on the Relationship between Virtual Economy and Real Economy Development in China

The development scale and degree of virtual economy should be adapted to the development level of real economy, and maintaining a moderate development proportion relationship between the two is the key to promoting sound and rapid economic development. Based on the perspective of economic development and the logistic model in population ecology, this paper constructs a regional virtual economy and real economy development model on the basis of the relationship between virtual economy and real economy development, studies the equilibrium and stability of the coordinated development of the two, and empirically studies the coordinated development ratio of virtual economy and real economy in China using the relevant data of the development of virtual economy and real economy from 1996 to 2008. The coordinated development relationship between virtual economy and real economy can reflect the evolution trend of economy. The coordinated development ratio can play a certain early warning role for the excessive expansion of virtual economy, and effective monetary and fiscal policies can be formulated according to the relationship between the actual ratio and the reasonable development ratio.

An Analysis of Gamification on Dota 2’s Business Model

Gamification has been widely applied to various fields to boost the user experience and engagement. Most businesses now have implemented gamification elements into their business models to increase their customer retention. These elements, often called the Customer Loyalty Programs have helped businesses retain their customer base by ensuring that their customers get rewarded for their support to the business. This paper analyses the business model of Dota 2, a Free-to-Play game which sells various in-game items including the Compendium annually. The compendium allows the players to earn or buy levels and receive rewards based on their achievements in the compendium. The compendium applies various concepts of gamification into it. The compendium is then annually improved by adding new rewards, milestones and features. We can expect that the sales of the compendium will increase with the implementation and improvement of gamification, which in turn can help to sustain the Free-to-Play model of the game.

TAX PROFILES OF THE DIGITAL ECONOMY

Computer science and technological developments of the last decades has impacted considerably on the forms and methods of production and circulation of wealth, encouraging the spread of new activities completely dematerialized within a social and economic context characterized by frenetic circulation of knowledge and information available than just a "click" and from a production, distribution and consumption of goods increasingly virtual and intangible. As activities that might acquire economic value, in terms of tax, we wondered if, in order to face emergencies raised by virtual economy, is sufficient to adapt existing fiscal instruments or is necessary, rather, developing new forms of levy, creating a virtual world taxation. Special emphasis hiring then tax profiles of the activities carried out by large multinational companies, digital society, with subsidiaries in several countries, that can produce very high incomes, hardly taxed in the source State or otherwise frequently taxed to a lesser extent than the ordinary tax regime. The Italian legal system has tried to remedy this widespread phenomenon, with timid actions which seek to establish, first, a Google tax, then a digital tax, before arriving to the web tax, recently adopted in two different subsequent versions (before “digital transactions tax” and after “digital services tax”), but characterized by an uncertain future.

Exogenous Shocks，Real Estate Prices and Enterprise Investment

Since the outbreak of the Global Financial Crisis in 2008, the evolutions of real estate prices and enterprise investment have become the important features of China’s economy. According to the National Bureau of Statistics in China, during the period from 2009 to 2016, the growth rate of China’s fixed asset investment takes a downward trend. The growth rate of the investment in 2009 was as high as 30.1%, while in 2016, it was only 7.9%. However, during the same period, the growth rate of real estate prices showed a V”shape. From 2009 to 2013, the growth rate of commercial housing in China was stable at 7.5%, and during the period from 2014 to 2016, the growth rate of housing prices rose rapidly from 1.4% to 10.1%. According to the data released by the People’s Bank of China, 45.6% of the new loans in 2016 were related to real estate loans and the issue of transforming the economy from real to fictitious was widely discussed in various circles. Along with the government’s continued macroeconomic regulation measures of the real estate market, the current slowdown in enterprise investment growth and the sharp rise in real estate prices have eased, but the sources of this problem have not been completely eliminated, such as housing prices rising from the first and second tier cities to the third and fourth tier cities. Physical investment, especially private investment growth is still not optimistic. In view of this, a clear understanding of the intrinsic link between real estate prices and enterprise investment is of great significance for preventing and defusing China’s systemic financial risks and introducing more effective macroeconomic regulation policies. Based on the stylized facts of China’s economic running since 2008, this paper constructs a New Keynesian Dynamic Stochastic General Equilibrium model with enterprises’ Balance Sheet Recession” mechanism, focusing on exploring how the features of the housing rigid demand and enterprises’weak foreign demand influence the relationship between enterprise investment and real estate prices. The results show that: First, the positive shock of the housing preference which origins from the rigid housing demand crowds in the real investment by a small margin while increasing housing prices. Second, the negative shock of the enterprise balance sheet, stemming from the weak foreign demand, decreases enterprise investment through the mechanisms of Financing Premium”and Balance Sheet Recession”, which causes the surplus funds to shift to the real estate market and then pushes up housing prices. Further, through the multiple scenario analysis of different tax burdens in enterprises, the research finds that confronted with the negative shock of the enterprise balance sheet, the lower corporate taxes can help to stimulate enterprise investment, and alleviate the phenomenon that the funds transfer from the real economy to the virtual economy. The main contributions of this paper are reflected in three aspects. First, in theory, this paper pays attention to the transmission mechanism of the enterprise balance sheet, and introduces the theory of Balance Sheet Recession” into the New Keynesian Dynamic Stochastic General Equilibrium model. The current research in this area is very scarce. This study expands the theoretical research on the problem of the enterprise balance sheet. Second, from the perspective of research, this paper pays attention to the portrayal of the stylized facts of China’s economy, and focuses on the mechanism of the link between current real estate prices and enterprise investment, which plays an important role in the objective and comprehensive understanding of the relationship between the two. The third one is on the policy implication. In view of the different tax burdens of enterprises, this paper examines the effects of both shocks from housing preference and the enterprise balance sheet on the relationship between real estate prices and enterprise investment, which can provide a certain theoretical basis for the government decision-making departments to issue corresponding macro-control policies.

Recommendation Mechanism for Patent Trading Empowered by Heterogeneous Information Networks

ABSTRACTThe emerging patent trading platforms help to ease information asymmetry and trust issues during transaction, but a proactive recommendation mechanism that intelligently helps patent buyers identify relevant patents is still absent in the literature. This study proposes a recommendation mechanism for patent trading empowered by heterogeneous information networks (HIN) that integrates various patent information such as patent trading, patent invention, patent citation, patent ontology, and patent contents. Further, the meta-path-based similarity measure (i.e., AvgSim) is employed to calculate relevance and identify the different motivations of potential buyers in buying patents. We conducted two experiments to examine the performance of a proposed mechanism. An offline experiment on Public PatentsView database and Patent Assignment database show that the HIN-empowered recommendation outperforms baseline methods. We also implemented the proposed mechanism on a real-world trading platform (www.InnoCity.com). The recommendation function achieves satisfying results by tracking users’ feedback, which further validates the usability of HIN-empowered recommendation in a patent trading context.

Central Bank Digital Currency: optimization of the currency system and its issuance design

ABSTRACTCentral Bank Digital Currency (CBDC) contributes to optimizing payment functions of fiat money, reducing reliance on payment services provided by the private sector, alleviating regulatory burdens and pressure on the central bank, and strengthening the authority of fiat money. Moreover, issuance of CBDC helps to address dilemmas of modern monetary policies, including inefficiencies in policy transmission, difficulties in countercyclical control, flow of currency away from the real economy to the virtual economy and inadequate management of policy expectations. This paper proposes a CBDC issuance framework based on forward contingencies. The incorporation of time, sector, and loan rate contingencies in the activation of CBDC will realize real-time transmission of monetary policy, enable targeted supply of money and prevent the currency from circulating beyond the real economy. The economic state contingency makes it possible to exercise countercyclical control of currency. The embedment of these contingencies also enables currency to perform the function of forward guidance.

Problems and Perspectives of Internet-Insurance in Ukraine

The problems and prospects of insurance development in the internet are considered in the article. Considerable attention in the research is paid to the theoretical aspects of the essence of «internet insurance». The main stages of the insurance process through the internet and the key requirements that apply to the insurer and the insured when completing the insurance contract are described. It is determined that for the insurance company key advantages in the organization of virtual business are: lower costs associated with the organization of the company's website; lower transaction costs for customer service operations; expansion of geographical diversification of company insurance products; an opportunity to increase the sale of insurance products at the expense of open access to customers from around the world; customer service on a qualitatively new level – seven days a week, 365 days a year. The analysis of the insurance products market in the internet was conducted. The study found that insurance services offered through the internet in Ukraine include property, personal insurance and liability insurance. The most widespread in Ukraine are such insurance products as insurance for travelling abroad, medical insurance, CASCO, compulsory insurance of civil liability of owners of land vehicles, insurance of property of individuals, etc. The easiest procedure for purchasing a policy among all of these is auto insurance. The key attention is paid to ways of improving the mechanism of providing internet insurance. In the course of the study, specific directions for developing an e-commerce strategy for insurance companies based on SWOT-analysis were improved; developed an algorithm for strategic management of the insurance company and a conceptual model of interaction between the insurer and the insured in the framework of the process of strategic marketing planning in the market of internet services. An important role in the processes of management of the insurer was given to the complex of marketing communications, namely the elements of the marketing mix: «product», «price», «sales», «promotion». It is determined that for entering an insurance company into the market of internet services, the subject of planning is the outline of the main goals regarding sales and income received, as well as the definition of their potential consumers (market segment), the forming of their own image and reputation. Keywords: internet insurance, insurer, on-line insurance, virtual economy, internet services.