  When land becomes more connected, its value can change because of network
externalities. This idea is intuitive and appealing to developers and
policymakers, but documenting their importance is empirically challenging
because it is difficult to isolate the determinants of land value in practice.
We address this challenge with real estate in The Sandbox, a virtual economy
built on blockchain, which provides a series of natural experiments that can be
used to estimate the causal impact of land-based of network externalities. Our
results show that when new land becomes available, the network value of
existing land increases, but there is a trade-off as new land also competes
with existing supply. Our work illustrates the benefits of using virtual worlds
to conduct policy experiments.
