Massive Multiplayer online games have been around for a long time, and is considered as one of the most interesting innovations in the area of social network. In this online role playing game, players from different sites can easily participate and obtain items that can have significant world value to other players. In game players can trade huge money by selling and buying virtual property.
In MMORPG the economy works differently with real world as virtual currency can be easily interfered from real world currency. As there is a huge virtual money flow in MMOG genres, so a virtual economic flow can effect the real world economy in terms of tax pay. The basic difference in between these two terms is that in real world economy there is a channel where the government is getting a part of once gross income at the end of year for each persons individually. In virtual economy on the other hand, the agent collects Linden dollars as virtual tax where two parties are involved in buying and selling their goods or properties. Then, the entrepreneur of virtual world pays real tax against its entire revenue at the end of the year instead.
The tax in MMORG is calculated from gamers gross income of gamers when they receive anything of economic value, whether in the form cash, property or services. The gamers income could be recognized when there is a transaction or the conversion from real world currency. Perhaps the substantial risk of forfeiture would take place which invalidates the point of income recognition during the in game transaction. If a person runs the risk of forfeiture, he may not be liable to tax. Thus, Virtual world is a computer simulated environment in which social network users interact with each other via graphical representation. Virtual worlds have captured the imagination of a considerable number of people which is not a game rather then collaboration, community development and innovation inside the enterprise.
In my opinion the term Demand and Supply is still controversial for the virtual economy as it in fact not a yet a true free market economy. Instead of supply of items be heavily dependent on demands the number of available items at any given time is at the mercy of the game developers. AS such equilibrium pricing in the virtual economy is the result of more factors than the forces of demand and supply as seen in the real economy.