Supply and Demand: The Negatives Arise
Professor Evil
It goes against every neoliberal bone in my body to say this, but if there's one thing that's ruining the eUK's war effort, it's supply and demand.
Most of the time, in RL, I'd contest this point bitterly. But, as was clearly pointed out to me when I did my first article regarding low grain prices, New World economics are not as straightforward as those of the Old.
Let me explain myself. Having raised my wellness above 40, I went to fight in Champagne-Ardenne. Its conquest was already well under way, but I wanted to increase my fights. I went to shop for a weapon, and found you could only purchase Q1s, which retailed at 4.4 GBP, or Q4, which sells for 25. While the prices aren't that much over the usual, the lack of market and quality choice was really notable.
The names of the sellers also made me realise something. The Department of Work's Royal Ordinance and Aurum arms. These are not the robber barons you would expect to have taken charge of all market forces, no sinister group getting rich off the war. These are highly responsible companies that hire way over their max production limit for humanitarian reasons. The reason they own the sole means of weapon production and the reason they're charging more than usual is simple; nothing more than supply and demand.
Consider it for a moment. You've got the MOD purchasing what must be five or six times their usual weapons quota as both their soldiers lose their weapons fighting and new recruits flood their reserves. Then you've got the huge number of independent soldiers swarming up for guns (I've bought my fair share, I'll admit) to do more damage in battle. All this is going to put an immense strain on the weapon supply, and as you'd expect to cover costs, the prices will rise.
If Royal Ordinance, for example, maintained their prices at around 1GBP, their guns would be snatched off the shelves quicker than they put them there. Oh, they'll get GBP, but it'll be nothing, not enough to justify production costs. Especially with their wage bill. It's the exact same thing with Aurum Arms, their huge staff numbers are evidently a philanthropic gesture for new players, and they have capital from the general Aurum conglomorate, but if they keep selling Q4 weapons at the same price as when the market was flooded with them, they're going out of business fast.
It also makes me quite glad in wartime that we've got these responsible, more socialised industries to keep prices at a responsible level. I could think of a few small market owners that, given the type of monopolies Royal Ordinance and Aurum Arms have, would charge silly prices and bring the war to a standstill. Of course, this view isn't shared in peacetime, where I look at the employee list of all the Department of Work projects and snicker as I speculate their wage bill. But, naturally, you have to put economic and political concerns aside when fighting against something greater, just like the Old World's Churchill and Ernest Bevin.
What will the shortage brought on by the war do to the market in peacetime? Only time will tell.
Comments
I like your writing style Richard, always makes an interesting read. Voted!
Ta much! 🙂
since when is 25GBP way over market price?
to outline i would say that although i think of Aurum as the competition that those prices are probably even cheap having so many workers unless they are getting government support.
Tim09
I agree with your points. The problem is that the laws of supply and demand dictate that market prices will rise during times of higher consumption/demand. The problem in the weapons industry in particular is that the companies were particularly squeezed. For a while there was little to no demand for weapons, with only the high Q companies making much money from selling to the MOD and the Paras. Now, however, the companies can't produce weapons fast enough to actually be able to make up the defecit of weapons that there are, with the added problem of the eUK having no discovered iron of its own, meaning that the already high iron price has been pushed even higher by an increase in demand.
You might find my first article on the economy intresting: http://www.erepublik.com/en/article/the-economy-what-is-wrong--708273/1
@Tim
It's not way over market price, but it's considerable to the 15gbp I saw a while ago.
@waz
I really like the look of your paper! I had no idea how problematic the eUK's lack of raw material sources was.