Merchant Archive

Hi, I am not a merchant now but the idea intrigues me. I think it's cool that this game allows you to be something more that just hack and slash (or blast for this matter). I posted this in response to a topic on the Starsider forum, but I figured I might as well go right to the real source - the actual merchants! Thanks in advance for your comments.

There is something that I don’t understand about being a “pure merchant.”

Using conventional economic principles, the law of supply and demand dictates that there will always be an equilibrium point in the market where vendors have a quantity supplied at a specific market price. This number satisfied the most consumersbecause ofthe inherent nature of an economy-society mustsatisfy the most (infinite) wants with a finite amount of resources.

Thus, because there will always be crafters who do not have to deal with the resale costs of a pure marketer (really, a middle man)and people will always seek the lowest prices (normally, disregarding convenience), how can a pure merchant’s business model possibly survive?

I wasn’t in beta so I have no idea how the actual player economy worked out. Do the merchant/crafters know that pure merchants have to charge a higher price and thus engage in game theory practices (where a high price strategy of one company is matched with a similar strategy, thereby benefiting both parties) similar to oligopolies? I want to eventually make a merchant, so this is important to me. Plus, I’m interested in how this actually works out in the player economy.

Excellent questions! Please forgive my responses, as they are only my opinions, and may be proved wrong in the very near future.

First, I believe that your understanding of economics is textbook perfect. Unfortunately, textbooks are static documents that do not take into account the contstant change that is the nature of everything. A perfect point of equilibrium can never exist. The fluctuation is constant. Add to this understanding the fact that economic theories do not usually take into account the premium that needs to be attached to the labor (our playing time) involved. Merchants will exist and thrive because crafters want to make the best gear, not gather resources, market, and sell.

Crafters need resources to craft. Those crafters that have reached master status already have not gathered all their resources alone, they had organizations that have helped them to acquire the massive amounts of resources needed to achieve experience. So there'sthe firstlinks in the chain, resource gatherers (scouts for hide, bone and meat) to Crafters. To more efficiently acquire resources, harvesters need to be employed. Someone (another crafter) needs to make the harvesters. Harvesters need power, so someone needs to keep the people running harvesters (and factories later on) supplied with power. With the multitude of materials and end-crafted items in SWG, outsourcing will becomemore necessaryand the middleman will have a place. It scales up quickly.

Now, considering the complexity of the marketplace if it continues to operate as a series of independents connected by a few middle-men (much like an 18th century commercial environment), very soon we will begin to see capital become a factor in the market. This is where I see "Pure merchants" becoming extremely powerful. With enough of a support organization (whether it be a series of arrangements constituting a closely held supply chain or a PA type organization, or a vendor network), capital will force more efficiency into the marketplace. Resources bought and sold in bulk achieve economies of scale, allowing those with the capital to buy big lots to undercut competitors and sell cheaper, but with more volume. Resources will flow to those with the skills to make the most desirable items, so that the merchant organization can turn around and sell themfor another profit. There are dozens of possible variations of this within SWG, and it will be fascinating to find out on each server who ends up controlling the market in power, harvested resources, organics, pharmaceuticals, installations, clothing, armor, weapons, etc.

Now you say, that doesn't really answer the question. But it does. There is only a finite amount of time that all the crafters, etc. in the chain can devote to their enterprise. Merchants become the glue. We spend our time doing deals, moving resources, goods and funds, and making the sale. It is the capital and time that we are adding to the economy, and this specialization benefits all others, and allows the others to become even more specialized, and also to become a more well-rounded character by freeing up skill points and time to learn fighting and other skills.

The thing that must be remembered, is that this economy is developing from zero in front of our very eyes! it's fascinating to watch. Everyone started with no skills and only the ability to sample their own resources. Amazingly quickly we have major manufacturing in existence in scattered, uncoordinated spots. As it develops, perhaps we'll see enterprises in SWG that dwarf the Trade Federation in scale within a year.

Wow...I really started rambling there. OH well, take what you like from it, and I hope I answered some questions.

I didn't know how detailed people wanted to get with this...

Now, as I said, I don't know much about the economy in Star Wars Galaxies. I dolike seeing this game develop from nothing. I didn't include the numerous (infinite) variables which are present in this economy because I wasn't sure how complicated this game actually is. From what I have seen so far, all crafters are the ones who sell their items, whether through the Bazaar or with their own stores. I realize I was jumping to conclusions by assuming that crafters would handle all aspects of production, but wouldn't a PA or something like that solve the problem and once again rule out merchants. How will a solo merchant be able to fair in such an economy? Maybe you can answer this question for me, it might help too...

Is the SWG economy subject to a purely competitive market or is it one that is monopolistically competitive? Right now, the answer is clear - pure competition. This seems to be the case because all new items are basically the same. Most people don't have slicers working for them and/or don't understand that material quality affects the effectiveness of the item. Will the economy eventually turn into monopolistically competitive market? I think that the answer is yes.

You know, now that I think about it, this game is really just amodel of what our economy is. When the market dynamics have stabilized and matured fully, we will get a small example of the real world. The more I think able it, the more amazing and interesting this class is. I think it's going to be my next character.

Clearly, you are very knowledgeable. My rudimentary understanding of economics (from my AP Economics Marco/Micro course) is dwarfed by your understanding. Thanks for taking the time to share your viewpoints.