Business And Economy Archive

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Slysix wrote:


Ok here's one that'll throw you for a loop.
Think of credits as a commodity. Just like any other item that's tradable in the game.

Easy enough since that's what they are.

Now imagine that you have an ever increasing supply of a commodity. Your telling me that demand of this commodity will not change? No the value of that commodity will drop due to the "oversaturation" of the market with said commodity.

So like you say supply and demand. There is to much of the stuff the price/value of the commodity will drop. Just like the price/value of the credit have dropped.

Not to the extent you'd like to believe, and I've already told you why.

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KammaRocca wrote:

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Slysix wrote:


Ok here's one that'll throw you for a loop.
Think of credits as a commodity. Just like any other item that's tradable in the game.

Easy enough since that's what they are.

Now imagine that you have an ever increasing supply of a commodity. Your telling me that demand of this commodity will not change? No the value of that commodity will drop due to the "oversaturation" of the market with said commodity.

So like you say supply and demand. There is to much of the stuff the price/value of the commodity will drop. Just like the price/value of the credit have dropped.

Not to the extent you'd like to believe, and I've already told you why.

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Phaelyn wrote:

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Giant2005 wrote:

That's all good, except (1) increased prices on premium items is not an all-around indicator of inflation and (2) the economy isn't broken.

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I beg to differ, obviously I can't comment on other servers, but I know the Bria economy is most definately broken. People have such vast fortunes that they are monopolising the game, which is effectively ruining the game for others and it isn't even their fault, they buy things that look useful and won't sell them even if these goods have no real use to the owner because they have no use for credits. A new player is literally hopeless on Bria. I know a player who has 29 ADKs just because he can - he might need them in the future so he buys them and he will keep them forever as he will never have a need to sell them, thus ruining any chances a regular player has of ever getting any non-renewable loot.

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The above highlighted is NOT, I repeat NOT a bad thing for the economy! How can I say that?

That ONE player certainly is removing his/her need to ever purchase another weapon or piece of armor. So, WS and AS all over Bria lost a SINGLE customer.

However, the OTHER 28 people who sold THEIR ADK's *willI* have to go on buying from those same WS and AS. If they had kept them, and all 28 had used their AFK on a weapon - The WS of Bria would have lost 29 potential consumers.

I'd prefer 28 customers out of 29 to need to repeatedly buy my weapons, instead of ZERO out of 29....

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mistereous1 wrote:

ADK's have gone up in value because WE as PLAYERS in a player controlled economy have decided that they are worth more. What specific event do you want to point to that increased the price of ADK's. Bounties dropping loot and schematics. As BH armor became something more readily attainable, everyone wanted a suit with health enhancements. To protect that suit, ADK's were needed. At the same time players less than a year into the game reached jedi. An ADK is a must have for your saber. So you have two sharp increases in demand with an item that has an extremely limited uncraftable supply.

All of that is independent on how many credits there are. If you slow the rate of credits into the system, all you've done is made the richest people richer and made it harder for everyone else to catch up.

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Muzz wrote:

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mistereous1 wrote:

ADK's have gone up in value because WE as PLAYERS in a player controlled economy have decided that they are worth more. What specific event do you want to point to that increased the price of ADK's. Bounties dropping loot and schematics. As BH armor became something more readily attainable, everyone wanted a suit with health enhancements. To protect that suit, ADK's were needed. At the same time players less than a year into the game reached jedi. An ADK is a must have for your saber. So you have two sharp increases in demand with an item that has an extremely limited uncraftable supply.

All of that is independent on how many credits there are. If you slow the rate of credits into the system, all you've done is made the richest people richer and made it harder for everyone else to catch up.

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But BH armour pretty much sucks. Why would anyone ADK that?

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SilverMamba wrote:

The economy is becoming more and more loot based, along with other things this has lead to hyper-inflation in this game. I propose making the following items NON-Tradeable.

1. Krayt Pearls

2. Crystals

3. CA's and AA's

4. Vet Rewards.

If you look at the forums what is on sale? These items. If they were non-tradeable there would be no market for them. If you want to get one of these items go earn them yourselves. This will discourage credit farming, becasue what good is 30million (off ebay)if you ahve nothing to spend it on. If people had to earn their own loot it would give the economy back to the crafters and should bring the economy back in line. If some one had a beter suggestiong I would like to hear it?

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Okay, time for some basic economics.

The cause of inflation is NOT higher prices for items. High pricesare the symptom of inflation, which is nothing more nor less than an increase in the supply of money relative to the goods available for purchase.

In certain galaxies (such as mine), a number of players have gained a knack for accumulating large bank reserves, either through successful careers asartisans, or as successful loot mongers. However, note this point carefully: They would NOT have been able to accumulate such large sums if other players did NOT have sufficient money coming to them from somewhere to buy the products they were offering.

In order for prices to go up, a sufficient amount of new money has to enter the economy (a semi-closed loop) from external sources. In this game, the only external sources are mission or quest cash rewards, or the sale of looted items (such as starship components) to NPCs. All transactions between players simply transfer existing money from one person to another within the loop.

In our economy, a very simple, stark rule is making it's presence felt: A large, but finite, supply of credits is chasing a similarly finite, but relatively small, supply of goods and services. The result: a "seller's market."

It's interesting to observe the interplay of quintessentially human factors in our in-game economy. The price and availability of goods and services like armor and foods is at a certain level because a certain number of players have decided it is worth their time and effort to produce these goods instead of going out into the environment as combat-only toons. Conversely, a large number of other players have decided it is not in their interests to sacrifice their character's adventurous career for the sake of a profitable career as an artisan.

Likewise, the pricing and availability of even more rare items -- items that border on artificial uniqueness, such as anti-decay kits and pre-CU "flawless" kraytpearls -- zooms to astronomical levels due to the unduplicability of these items and their desirability. But here's the thing: The high pricing on such items is NOT the foundation of this in-game economy! Rather,these prices aremore like a strange, aberrant eddy in the flow of money. Rather than cite these examples as the "cause" of inflation, a discerning student of economics would ask, "Where in the hell are people getting that kind of money, allowing sellers to expectsomeoneto pay such prices for these items?"

At this point, a new vector has emerged in the flow of money through our economies: Loot. Looted weapons, looted armor schematics, looted skill-enhancing attachments, looted decorative items, and so forth. Will these looted items turn the flow of credits away from our in-game artisans? Perhaps, to a degree. When someone buys a +14 Lightsaber Accuracy cloting attachment sells for 15 million credits, that's 15 million credits he will not have in his bank account fora suit of RIS armor. But the seller might then go out and do so. And thus, the great wheel -- that great, circulating engine called an economy -- begins to turn.

So that's a brief look at the source of inflation, and the way new and existing money circulates through an economy. Now, let's look at deflation, or the removal of money out of the economy.

In our economy, money is extinguished in one way: through item decay. Houses and other buildings are the most direct removers of in-game money, because the moneyconsumed from thestructures' maintenance pools simply disappears. An indirect remover of cash is item decay and maintenance. When I buy a suit of composite armor, that suit can be looked at as a capital good. Resources were mined and consumed to produce it, and I subjectively assigned a monetary value to that product by purchasing it. Now, I can mothball that suit of armor in an effort to preserve it's value, or I can use it. If I use it, it decays. And that steady erosion represents a steady extinctionof the money I invested in that suit, until each component finally falls apart in a botched repair attempt.

Now, the question for me becomes how I can earn more money in the course of my consumption of that armor suit than what that suit cost me. If I go out and only generate income from the directcash rewards of my mission, then I might be able to outrun my financial outlays for my equipment. However, another factor comes into play: My ability to spread my hands outward and tap into the flow of money around me by selling looted items.

Now the money game takes on a whole new dimension. As I noted earlier, some players have become very good at the loot-mongering game, to the point that they can afford to become brokers for unique items like ADK's and premium krayt pearls. At what point does this subset of our in-game economy take over the rest of the economy? Good question. Personally, I don't think it will ever truly happen, because every transaction has to be an equal-and-opposite movement of two forces: the purchase, and the sale. The buyer, and the seller. As long as there is someone out there willing to pay a seeminglyobscene price for a unique item, the economy can still be seen as moving and dynamic -- at least, somewhere. It's only when all the wealth concentrates in the hands of the would-be sellers, leaving would-be buyers without the resources to buy said products, that an economy can be said to be "taken over." And at that point, it's inaccurate to say the economy's been "taken over" by loot. Rather, the economy simply comes to a halt, with no one able to buy, and consequently, no one able tosell.

Obviously, we're a long way from that point.

And we always will be, because at some point in the pricing curve, people will simply choose NOT to pay a certain price for a given item. For example, I refuse to pay 20 million credits for an ADK. I could work very hard and perhaps accumulate a sum like that, but I choose not to. It's not worth the effort to me to accumulate 20 million credits for such an item --or any item, for that matter.

Say what you will, the bottom line is that loot will never overthrow my freedom to make choices.

And by the way, the purchase and sale of Force Crystals and Krayt Pearls is probably a deflationary force of colossal proportions. Inevitably, when someone invests 20 million credits in one of these increasingly-rare items and actually tunes the thing, he runs a significant risk of a bad tune. And for every one that does turn up a crappy tune, that's 20 million credits that just went up in a puff of vapor. The proud owner now has a very, very expensive bookend.

So don't let the devs see or know about this thread, because it might just give them the idea to come up with similarly high-risk items for ALL player professions as a way to siphon money out of these overheated economies. For example, a rare Philosopher's Stone turns up in the possession of a freshly-killed Nightsister Elder. That stone allows the possessor to upgrade the quality of a block of a given resource by, say, 200 points or so, with diminishing-return factors influencing the result at the high end. Or maybe it imbues the owner with an extra bit of crafting genius that allows him to craft a superb, uniquely high-quality item. But with every use, the stone decays a wee bit, and perhaps even carries with it a significant risk that it will completely self-destruct any time it's used. How many artisans would pay exhorbitant sums for such an item? And to the point, how much capital would be lostwhen such an item goes up in a puff of smoke?

Be careful when you wish for an end to inflation. You might just get what you wish for.

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Joker_fX wrote:

Theres one real easy way to fix it, but no one will like it heh... Reset everyones money to 0... i'm broke anyways so i'm all for it hehe

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If you did that, in a month the exact same people would be rich again, and the exact same people would be whining about it.

Just like all the PVP nerfs. Some people are better than other people at certain things. And some people will always feel that "fariness" means handicapping the strong to keep the weak from feeling bad about themselves. It's no different than Socialism and other confiscatory economic systems in real life.

Message Edited by Vermicious_Knid on 10-23-2005 11:34 AM