Capitalising the network externalities of new land supply in the metaverse

Abstract

We investigate how new land releases affect the pricing of nearby parcels in a standardised virtual real estate market. Using 9920 secondary-market transactions from The Sandbox on the Ethereum blockchain, we implement a difference-in-differences design around expansion announcements. Nearby parcels appreciate post-announcements and the effect decays with distance (approximately 9 % under a discrete near definition; distance halving implies approximately 2.2 % higher prices). Proximity capitalisation weakens as release size increases but strengthens in branded partner/celebrity waves and wanes during a market-wide salience episode (Facebook rebranding to Meta). Results show that in digital economies, spatial value concentrates through attention-driven network externalities rather than physical access.