CCP's War On Illicit ISK - The eBay Hockey Stick

@noizygamer hey, something happening on ebay, most of rmt offers are gone for some reason. Do you knoew anything about it and, maybe, it affect black isk prices?

— Aspecter (@aspecter) September 18, 2018

Just a quick detour away from the CSM summit minutes now that I have some secondary (aka black) market numbers in for the third quarter. Sometime in Q3, probably in July, eBay stopped allowing people to sell virtual items from video games on the site.

Aspector asked whether the move had an effect on the price of ISK. As far as I can tell, the ban on eBay just meant that sellers shifted to other platforms. The crooked hockey stick in the graph above is a result of the move, with the volume of sales jumping in the third quarter of 2018.

The virtual currency site Player Auctions was a beneficiary of the crackdown on sales on eBay. As the chart above shows, sales declined in the third quarter of 2017, reflecting the traditional decline in activity in EVE during the summer. If I am correct about when the purge on eBay began, that means sales on Player Auctions jumped from 2,806 billion ISK in June to 5,499.4 billion ISK in September, a 96% increase. Normally I would compare the same period in 2017, but the massive sell-off ahead of the bans related to ghost training at the end of June 2017 really distorts the picture.

Just to make sure that a crazy price shift didn't create the increased demand, let's look at the price of a billion ISK. In 2017, the price of ISK rose by $0.60/billion ISK, or 11.6% from July to September, with a decrease in sales of 6.6%. In 2018, the price of ISK dropped 15.1% in the same period, with and increase in sales of 51.7%. Doesn't sound quite right, does it?

I then calculated the price elasticity of demand. The price elasticity formula indicates the expected rise in the demand of a product for a 1% decrease in price. All else being equal, in 2017 a 1% decrease in price of 1 billion ISK resulted in a 0.63% increase in demand. In 2018, on the other hand, a 1% decrease in price produced an increase of 2.5% in sales. In 2017, ISK was very inelastic. In 2018, very elastic. Even assuming that a 1% decrease in price normally resulted in a 1% increase in sales, that leaves other factors causing the other 60-70% in increased sales. The major factor was the ending of RMT sales on eBay.

I'm not sure exactly what caused eBay to begin enforcing their terms of service concerning virtual item sales connected to video games again. I can say two things, though. The first is that the price of black market ISK wasn't as affected as much as where ISK sellers hawk their wares. The second is I no longer have a good (or even mediocre) sense of how big the RMT market concerning EVE Online is anymore. Removing such a large platform for RMT sales really screws up my existing calculations.