How CS:GO skins market explains basic economics
As many of you probably know, I play Counter-Strike: Global Offensive.
When I tell my lay friends about the game, of course the “skins” subject comes up. And I always cause astonishment when I tell them the average value of some skins. If you’re not familiar with this, behold:
There are skins that cost thousands of dollars.
There are some players and CS:GO enthusiasts whose inventories worth hundreds of thousands of dollars, sometimes even close to half a million dollars.
There are several celebrities that collect CS:GO skins, like the soccer player Neymar, whose inventory worth is close to €20,000.00.
But wait. Before I forget, if you don’t know WTF is a skin, let me tell you.
As pretty well defined in Quora by a guy named Hermit Chawla, skins are weapons with different textures that can be equipped in-game. They are entirely cosmetic, holding no gameplay function. That means that no, you are not going to perform better, earn more points, or have any other benefit by having skins. It’s 100% aesthetical.
(Of course you can feel much more motivated to play if you have skins, therefore the outcome of your playing can be better… but that’s too personal and subjective, not the point here.)
Ok, back to the price of the skins.
There are skins of every price. From one cent to more than ten thousand dollars. Usually, the most expensive skins are the knives and the gloves, alongside some really rare and special items (like the M4A4 Howl below and its stickers).
You might be asking, why the hell are those skins so expensive? How can it be? What determines the price?
Well, the answer is really simple: it’s basic economics.
What I mean by that — and here the Austrian School of Economics comes in handy — is that the price of a product is based mainly on the subjective value that a person (or a group of people) lays on that product. The other reason, of course, is supply and demand.
The way to determine the price of a good has nothing to do with a labor theory of value, that our old friend Marx formulated. This theory of value argues that the economic value of a good or service is determined by the total amount of socially necessary labor required to produce it.
On the other hand, the Austrian subjective theory of value stipulates the idea that the value of a good is not determined by any inherent property of the good, nor by the amount of labor necessary to produce the good, but instead value is determined by the importance an acting individual places on a good for the achievement of his desired ends.
The first part of this definition is pointing to Marx’s theory of value (and that explains the cartoon above). As I said, CS:GO skins are purely cosmetic. And there is no extra work to create them, nor extra time spent. It’s just a program. It’s code. It’s virtual.
And the well-known supply-demand model is easier to explain. It states that the unit price for a particular good will vary until it settles at a point where the quantity demanded (at the current price) will equal the quantity supplied (at the current price), resulting in an economic equilibrium for price and quantity transacted.
As the diagram shows, if there are more of a good available than people wanting to buy it, the price of it tends to decrease. Likewise, if there are more people wanting the product than the quantity available, its price tends to increase.
That’s basic economics, and that’s inescapable. If a good exists, that’s the way its price shall be settled. In real life, or inside some virtual game.
For curiosity, you can find here all of CS:GO skins and their prices. Enjoy ;)
