The Erep Economy, Part II
Day 1,620, 06:30
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Published in USA 
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by
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by Rigour6
This is Part II in a 4 part series on the Erepublik Economy.
The series is in 4 parts:
Part I: Oversupply, its causes and effects
Part II: (today) Platobots and The Motivations of Their Masters
Part III: What You as a Player Should Do in the Present Economy
Part IV: Possible System-Wide Innovations and Their Effects
Part II: Platobots: What they do and Why
Yesterday, we observed that there is a huge and more or less permanent oversupply of basic food and weapons, and that unlike real life markets, there is no nominal cost of production and hence no natural floor on prices.
The only “floor” which appears to exist is provided by platobots,
automated buyers from the admins which buy up portions of the excess in the market.
By doing so, the admins hope to keep players motivated and thinking that we can become more prosperous in this game by converting static gold into dynamic, wealth-producing factories.
Let us take a moment to examine the depth of that intervention.
If the admins use bots aggressively, they will make the players rich and remove any need for them to buy gold.
So what would you rationally expect the admins to do in this situation?
The answer is exactly what we are seeing. The platobots are intervening only to the minimum amount needed to maintain the illusion of the market as a wealth generator.
Even if they were to decide to purchase a constant amount from the market (say 1000 units every hour on the hour) over time that would not keep up with the ever increasing supply.
Each time a player accepts the admin appeal to purchase another factory, the supply glut worsens.
In essence, there is only ONE item in this present market which has a real value, and that is gold.
That is because there is a real demand for gold, which is why the price of it keeps rising.
ALL other goods, be they food or weapons, are more or less worthless and the factories which produce them are junk bond printers.
This is why the price of them keeps falling.
A few weeks ago, I was selling Q5 tanks in the $30 range and Gold cost $1600 a unit.
Now those same tanks cost about $22 and the Gold costs $2100 per unit.
That represents a drop of almost half in the value in gold of my factory production.
This is NOT a market swing, this is a result of platobots being unable/unwilling to keep up with supply and pull the glut off the market.
Now it may be true that the market may swing within some range despite this. It may also be possible that the admins may “dial up” the platobots from time to time, causing prices to stabilize.
But remember the admin motivation –
they do not want stable self-sufficient markets,
they want to create a continual demand for new gold infusions –
and not “earned” gold (from medals, etc), but purchased gold.
Coming Soon: Implications of this for the Player Strategies
N by NE Volume 6, Number 2
The series is in 4 parts:
Part I: Oversupply, its causes and effects
Part II: (today) Platobots and The Motivations of Their Masters
Part III: What You as a Player Should Do in the Present Economy
Part IV: Possible System-Wide Innovations and Their Effects
Part II: Platobots: What they do and Why
Yesterday, we observed that there is a huge and more or less permanent oversupply of basic food and weapons, and that unlike real life markets, there is no nominal cost of production and hence no natural floor on prices.
The only “floor” which appears to exist is provided by platobots,
automated buyers from the admins which buy up portions of the excess in the market.
By doing so, the admins hope to keep players motivated and thinking that we can become more prosperous in this game by converting static gold into dynamic, wealth-producing factories.
Let us take a moment to examine the depth of that intervention.
If the admins use bots aggressively, they will make the players rich and remove any need for them to buy gold.
So what would you rationally expect the admins to do in this situation?
The answer is exactly what we are seeing. The platobots are intervening only to the minimum amount needed to maintain the illusion of the market as a wealth generator.
Even if they were to decide to purchase a constant amount from the market (say 1000 units every hour on the hour) over time that would not keep up with the ever increasing supply.
Each time a player accepts the admin appeal to purchase another factory, the supply glut worsens.
In essence, there is only ONE item in this present market which has a real value, and that is gold.
That is because there is a real demand for gold, which is why the price of it keeps rising.
ALL other goods, be they food or weapons, are more or less worthless and the factories which produce them are junk bond printers.
This is why the price of them keeps falling.
A few weeks ago, I was selling Q5 tanks in the $30 range and Gold cost $1600 a unit.
Now those same tanks cost about $22 and the Gold costs $2100 per unit.
That represents a drop of almost half in the value in gold of my factory production.
This is NOT a market swing, this is a result of platobots being unable/unwilling to keep up with supply and pull the glut off the market.
Now it may be true that the market may swing within some range despite this. It may also be possible that the admins may “dial up” the platobots from time to time, causing prices to stabilize.
But remember the admin motivation –
they do not want stable self-sufficient markets,
they want to create a continual demand for new gold infusions –
and not “earned” gold (from medals, etc), but purchased gold.
Coming Soon: Implications of this for the Player Strategies
N by NE Volume 6, Number 2
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Comments
Some photos would be nice!
They would be. I had to decide quite some time ago if I was going to go that route. I enjoy photos of women in states of undress as much as the next feller, for example, but my style is pretty "black letter" and "wall of text" in many cases. N by NE is not the New York Post, more like the Financial Times.
As a result of this, we don't appeal to a certain demographic of players and fair enough. I've been prepared to accept lower readership over the years, in effect allowing the audience to self-select.
But you're right, some photos would be nice.
economy is on the point where there's no turning back... so it's going to suck until the game is shut down...
Wow. I actually understood every word and it all made sense. Not only is our economy non-existent we were suckers for ever thinking a q6 factory would be wealth generator. I'm not jumping on a Q7.
each increase in quality is just meant to tempt gold addicts to take another hit.
i've started to look at this game from an addiction point of view and its all making sense now.
With the platobot unreliable, perhaps strength training and upgrades is the only safe and productive/profitable place to invest Gold.
do like me and add a pic in each article😃
I'm lazy to write a detailed comment, but I will just say that I regard the bot to be quite aggressive (it's becoming more aggressive overtime and this is NEEDED b/c production is omni-increasing), bots don't make players richer collectively (they only make individuals richer)and the reason that prices are dropping is that the bots are forcing them lower.
Bot decides on the price; it's not that it can't keep up with overproduction, it's that they decide to purchase this overproduction at lower and lower prices. They could have kept the prices as high as 3 weeks ago, but if they had done that gold rate wouldn't have been at 2100, but much higher. Everything shows up at the gold market eventually.
voted and keep up the good work🙂
nice article~
voted and subbed keep up the good work🙂
Very nice articles, thumbs up!
Cheers
Phitio
What this article fails to recognize is the appreciation of fixed asset value as the price of gold increases. A Q1 plant that I bought for 20 gold @$500 a year ago now = $10,000 is now worth twice that on the market, going for 9.5 gold @1900 = $18,050. On my balance sheet, I account for capital assets at their eRep sales price (not what they sell for on the open market), but since these assets are demoninated in gold, their value continues to rise even as their nominal price in gold falls.
Consequently, even with the 50% markdown eRep puts on sell-backs, that Q1 plant that was bought a year ago on the open market for $10,000 is worth $9500 in current dollars. Consider the return on investment on that plant in years time, at 200 units per day and a normal profit margin of .30 per unit. That's $21,900 or 11.52 gold.
So, what would happen if the cost of food raw materials went down to a penny. If that were the case, the cost of a days Q1 production would be $2.00 for raw materials plus up to 17.5 x the price of Q1 food for labor costs. If Q1 food drops to two cents, you lose $0.35 per production run. Three cents is as close as we can come to an equilibrium price with a production cost of $2.53 per run and a profit margin of .47 per run (18% profit). That's as lean as it could get.
@Samuel: I am wanting to follow your argument. How are you able to buy companies on the open market using currency? They are priced in gold.
Your comparison must be made with what the same gold you purchase with then would now buy, to my mind. And today you could build the factory for less gold. I'm not sure what that does to your numbers, but I am trying to work through your argument.
@Samuel: There is a theoretical floor at pennies per unit. The price might be pushed below that because there is an advantage in experience of conducting construction anyway, so people might be willing to produce at a loss. However, that's largely theoretical only. I doubt we'd reach that point.
My point in describing the absence of a true price floor is to dissuade players from regarding the present falling prices as temporary. or market swings.