New economic equilibrium achived after introduction of Rocket Factories
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by Duke of Norfolk
It has been a few days since the introduction of Rocket Factories into the economic system. Price levels in an array of markets have fluctuated wildly but new market equilibrium are becoming apparent. The Pink Sheets previously attempted to identify a few markets where product price movements would be seen (Weapon prices reach for the sky, Day 1679). This article attempts to verify those price movements and also introduce any unforeseen or overlooked market movements.
Elevated Q1-5 weapons prices during this demand squeeze.
This price movement was seen on the first day of trading and became extended as novelty and stock demand effects drove demand. Gradually market prices eased back as both effects waned. Initially 'The Pink Sheets' expected an equal upward shift in Q1-5 weapons prices. It was incorrectly assumed that:
- Established weapons producers would already have upgraded their production facilities and would not have Q1 and Q2 weapons factories to increase supply to meet market deamnd without incurring significant downscaling costs;
- The limiting employment opportuities in Q1 and Q2 factories would restrict the ability of producers to meet market demand when compared with Q3+ facilities, and;
- The low retention rate of new citizens would not significantly increase the supply of Q1 and Q2 weapons facilities.
These assumptions proved incorrect as a kink has developed in the weapons pricing curve between Q2 and Q3. This kink may be the result of the introduction of illegal immigrants solely generarted to fill the Q1 and Q2 supply gap. Another author (I should introduce the reference here but it has rolled off my news screen) did suggest that Q1 and Q2 supply would be ample as lower level characters have an abundence of these facilities given they are either free or desired due to mission requirements.
Increase WRM prices as production shifts from food to weapons production
WRM prices rallied three fold initially but have gradually fallen back to near pre-rocket factory levels. This market development is of concern as it either suggests that there already existed an initial significant supply over hang or that weapons production hasn't really been significantly increased to meet new demand. If the later is the case it could portend negative price effects in the labour and weapons markets.
Reduced GOLD prices as the uses/importance of GBP increases relative to gold
Gold prices initially fell from 2900 to 2400 but have since stablised around the 2500 level. With rocket production require significant real resources GBP demand will remain higher than before sustaining this move in the near term. It must however be noted that the long term trend of firmer gold prices remains intact.
Increase in wages as low quality weapons factories not previously employing labour find it profitable to now do so
Wage rates within the eUK have increased from around the 200GBP level to 235GBP Level. Weapons production has increased but the labour market may now see a weakening in employment demand as Q1 and Q2 factories find it difficult to maintain employment levels as prices fall back.
Q1-4 weapon company sale prices will increase and offers will decrease
Weapon company prices rallied after the introduction of rockets within the economic system. This is natural given the expectation that higher weapons prices will increase returns and make production assets more valuable. The expectation was for all weapons facilities to see prices increases but as noted above price rises have been concentrated in the Q3 and Q4 sector.It should however be noted that purchasing Q1 and Q2 facilities does offer industrialist a lower cost way to upgrade to Q3 and Q4 production with the only market offers of 88 gold in Q3 weapons factory market and no current offer int he Q4 market. With this in mid 'The Pink Sheets' still believes that Q1 and Q2 facilities offer good value at current market prices.
All in all the recent economic changes show that markets within the eUK are dynamic and flexible.Further economic changes that increase product and employment demand, especially in the sub Q6 area, will be greatly anticipated and appreciated. Increasing stockpiles of food products may be pertinent if further economic changes do materialise. It should be noted that last weekend WRM prices jumped from the 0.07 area to 0.12 without much of an explanation. Was there some insider dealing? Look out for any similar price movements in the FRM sector as it may be a prelude of more to come.
Ed.
Useful Links
http://www.erepublik.com/en/article/weapons-prices-reach-for-the-sky-2069342/1/20
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Comments
Good read
Voted!
One thing you have misse😛 the prices of weapons may have gone back (more or less) pre-rocket prices due to *demand* dropping back to similar levels. There was a few days where the rockets were a novelty and everyone with a factory wanted supplies, but now they have been around, rocket factory owners don't feel the need to use them all the time. Myself, the rocket I have sitting in my store, I build several days and am saving it. If you could store multiple rockets, demand might contined...
... to have remained high. While there might have been a few people buying extra weapon factories (especially Q1 etc as they are cheap) to take advantage (I considered this myself but didn't), I think the prive movement is largely down to demand factors rather than supply.