Game Market

[Cooper_]

Hello everyone, I just had an idea that might resolve the issue we are seeing with low resource prices.  To preface this, I could spend a lot of time making fancy graphs to explain the economics behind this idea, but in the interest of time I'm just going to try to explain my idea.

I believe that there should be an in-game market that allows players to sell (not buy) their resources to the game for set cash prices.  This accomplishes multiple goals by acting as a price floor.  First, the market will force the trading market to be above that price preventing any market spiral towards extremely low prices as we see today.  This works because if the game market has a certain price than the player market couldn't have a market price any lower otherwise people would be unwilling to sell at market prices with better game prices.  Second, this would work to decrease the resource glut that has partially triggered this market drop as these resources would be converted into nothing for cash.  Cash is something more limited and is already leaving the system through city purchases, infra buys and military spending/projects (which affects resources to a much less significant degree than cash).  This would balance the loads of nations producing massive amounts of resources by allowing resources to leave the global economy and provide a solution to the relatively low demand for the surplus of goods on the market.

In practice, this market would almost never be utilized because global prices would have to better and you can't buy resources from the game market, so it only exists as a benchmark price minimum/floor.  This point addresses some of the problems that may be considered such as the loss of trading profit margins and how close the player market would stick to the game market.  And I think it is furthered by the credit market which is an example of what this would actually look like since credits = 10 mill, essentially its built-in price floor.  The credit market regularly has margins between 1-2 million between buy/sell prices, so that means that 20% profit gaps are possible even with the price floor in place which largely matches profit gaps seen in the current market with other resources.  Additionally, the credit market is normally buffered by a decent margin from the 10 million selling point for credits.

Another problem can come from the fact that credits are premium currency because they are always readily convertible into cash which allows maneuvering even during times of blockade, so as a potential solution, this market could be made inaccessible whenever someone has a defensive war or during a blockade.

Finally, the question comes to what would the prices be, and I believe they should be fluid at first to find the right point at which consumer and producer surplus are even (basically the most fair price for buyers and sellers).  After finding that point, they should be fixed.

 

That was a lot of writing.  I'm sorry, but I'm interested to hear your thoughts, Orbis!

[James Hutton]

11 hours ago, Cooper_ said:

Hello everyone, I just had an idea that might resolve the issue we are seeing with low resource prices.  To preface this, I could spend a lot of time making fancy graphs to explain the economics behind this idea, but in the interest of time I'm just going to try to explain my idea.

I believe that there should be an in-game market that allows players to sell (not buy) their resources to the game for set cash prices.  This accomplishes multiple goals by acting as a price floor.  First, the market will force the trading market to be above that price preventing any market spiral towards extremely low prices as we see today.  This works because if the game market has a certain price than the player market couldn't have a market price any lower otherwise people would be unwilling to sell at market prices with better game prices.  Second, this would work to decrease the resource glut that has partially triggered this market drop as these resources would be converted into nothing for cash.  Cash is something more limited and is already leaving the system through city purchases, infra buys and military spending/projects (which affects resources to a much less significant degree than cash).  This would balance the loads of nations producing massive amounts of resources by allowing resources to leave the global economy and provide a solution to the relatively low demand for the surplus of goods on the market.

In practice, this market would almost never be utilized because global prices would have to better and you can't buy resources from the game market, so it only exists as a benchmark price minimum/floor.  This point addresses some of the problems that may be considered such as the loss of trading profit margins and how close the player market would stick to the game market.  And I think it is furthered by the credit market which is an example of what this would actually look like since credits = 10 mill, essentially its built-in price floor.  The credit market regularly has margins between 1-2 million between buy/sell prices, so that means that 20% profit gaps are possible even with the price floor in place which largely matches profit gaps seen in the current market with other resources.  Additionally, the credit market is normally buffered by a decent margin from the 10 million selling point for credits.

Another problem can come from the fact that credits are premium currency because they are always readily convertible into cash which allows maneuvering even during times of blockade, so as a potential solution, this market could be made inaccessible whenever someone has a defensive war or during a blockade.

Finally, the question comes to what would the prices be, and I believe they should be fluid at first to find the right point at which consumer and producer surplus are even (basically the most fair price for buyers and sellers).  After finding that point, they should be fixed.

 

That was a lot of writing.  I'm sorry, but I'm interested to hear your thoughts, Orbis!

My problems with this:

1)." First, the market will force the trading market to be above that price preventing any market spiral towards extremely low prices as we see today." A mechanic that does not let players decide the price of resources defeats the purpose of having a fluctuating market, and would prevent people from lowering prices to compete with other people.

2)." This would balance the loads of nations producing massive amounts of resources by allowing resources to leave the global economy and provide a solution to the relatively low demand for the surplus of goods on the market." I disagree, by having a market that would jack up the prices of resources it would cause more damage to nations then help them, as It would cost the customer more then the norm. Additionally, raising prices on a global scale would cause only less and less resources being bought, and that would defeat the purpose of having this market anyway.If people keep mass-producing items of course the price goes down that is how the real world works. 

3)."In practice, this market would almost never be utilized because global prices would have to better and you can't buy resources from the game market, so it only exists as a benchmark price minimum/floor." Then why not just say we need a price floor instead of introducing a 24/7 customer. And I'm pretty sure price floor for resources suggestions have been shot down by alex in the past.

If you are concerned about the recourse trade prices going down, don't worry eventually the prices would go back up that is how a free-flowing market works. Eventually the resources would become so cheap that people can't afford to drop prices further, and then resources wouldn't be produced, increasing prices. Also, this would buff uranium production witch is a very, very bad idea.

[Cooper_]

4 hours ago, James Hutton said:

1)." First, the market will force the trading market to be above that price preventing any market spiral towards extremely low prices as we see today." A mechanic that does not let players decide the price of resources defeats the purpose of having a fluctuating market, and would prevent people from lowering prices to compete with other people.

Ok I addressed this point by using the example of the credit market where this exact mechanic already exists.  It is quite clear that the credit market fluctuates it just does always at a  level above the price floor or 10 million in this specific case.  Players also still decide the price for credits, and they can and have been doing that in the range of 10  million upwards as the market price for credits.  Also, people can also still lower prices there is just a limit on that to the point at which it reaches the game market value, and in this case the game market actually functions better.  In your example someone would lower prices, but if they're willing to go so low (most likely due to large supply) that it reaches the price floor then they have a guaranteed buyer in the game market.  This means that its even better for producers who are willing to lower prices, and their large surpluses get removed from the game which then benefits other sellers by stabilizing prices at a higher level.

4 hours ago, James Hutton said:

2)." This would balance the loads of nations producing massive amounts of resources by allowing resources to leave the global economy and provide a solution to the relatively low demand for the surplus of goods on the market." I disagree, by having a market that would jack up the prices of resources it would cause more damage to nations then help them, as It would cost the customer more then the norm. Additionally, raising prices on a global scale would cause only less and less resources being bought, and that would defeat the purpose of having this market anyway.If people keep mass-producing items of course the price goes down that is how the real world works. 

Again you are only looking in the short-term perspective, and economics usually only fully manifests in the long-term (that is actually how the real world works).  Prices wouldn't be jacked up rather they would exist at an equilibrium above the price floor set by the game market.   And your statement is contradictory because you say that less people would buy at higher prices causing less resources to be sold, but if less resources are sold then producers will lower prices (or buyers will submit lower bids) which will lower the price in the long-run–you even say this yourself and the price floor won't affect this dynamic.  Then, if prices get so low that they reach the game market, the market is self-stabilizing because those surplus resources will leave the economy increasing prices once again.  This also reinforces how the market will have fluctuations from your previous point.  From the consumer-side, there is a concept known as consumer surplus (the difference between what someone is willing to pay at the maximum and what they actually pay) and there is a price that is able to balance consumer surplus with producer profits.  I agree that it might take a trial or 2 to find that price which I suggested having them fluid until they stabilize at some locus and then making them fixed.

4 hours ago, James Hutton said:

3)."In practice, this market would almost never be utilized because global prices would have to better and you can't buy resources from the game market, so it only exists as a benchmark price minimum/floor." Then why not just say we need a price floor instead of introducing a 24/7 customer. And I'm pretty sure price floor for resources suggestions have been shot down by alex in the past.

 

Because a price floor doesn't have the advantage of acting as a gateway to remove resource gluts from the game.  The economic solutions and the self-stabilizing nature of the market with the addition of a 24/7 customer (only to sell) works specifically because resources can leave the game economy and increase currency reserves.  The price floor aspect is only one component of the solution, and even at that its more of an indirect effect due to the fact that markets could potentially go lower although it would be very illogical.

 

4 hours ago, James Hutton said:

If you are concerned about the recourse trade prices going down, don't worry eventually the prices would go back up that is how a free-flowing market works. Eventually the resources would become so cheap that people can't afford to drop prices further, and then resources wouldn't be produced, increasing prices. Also, this would buff uranium production witch is a very, very bad idea.

The market would still be free-flowing.  Maybe a better way to phrase it then a price floor is a giant consumer in a free-market.  Producers will sell to that consumer in massive quantity at a fixed price unless smaller consumers offer better prices for the producers.  I already explained how the market is self-stabilizing which promotes natural fluctuations but prevents extremes, so I don't see those impacts on uranium production and uber-cheap resources manifesting.

 

If I haven't properly answered all of your quandaries, let me know.

[Sir Scarfalot]

Y'know, low resource prices just imply a high value of raw cash. Migrate your industries to commerce, even at 1500 infra it works better than raws

[Cooper_]

@Alex

I believe that this solution would allow Orbis to continue with the resource production buff while making the trading system more stable in the long-term (and even conserving the benefit of the market that we have right now).  

@Sir Scarfalot

There isn't a problem with cash having a high relative value, which makes sense given the want to build cities/infra during rebuilding after Knight Fall.  My solution would still even allow for these price fluctuations to exist but also protect prices from reaching rock bottom and provide more cash supply for the market, making rebuilding more effective as people sell off their warchests and resources.