Economic Predictions - Latest Update
Gnilraps
Day 3573 of the New World
September 1, 2017
You've already heard the news. Plato is "re-denominating" the RM markets.
Don't have a cow. Nothing about production is changing. All your RM factories will continue to produce at exactly the same rates. They simply will produce different denominations. Honestly, there's no need to discuss this aspect of the change. In short, you used to produce 100 products worth .04 each. Now you produce 1 unit worth 4. Fin.
What I would like to propose is that this change will actually create deflation across all markets. Let me explain why I think so:
eRepublik Selling Behavior
One of the earliest lessons I learned about the eRepublik marketplace (and yes, I learned this lesson over 7 years ago and nothing has changed) is that the majority of citizens who produce goods for market do not set their selling price based on a desired profit margin. There is ZERO discipline among vendors in eRepublik.
Instead, what drives the majority of eRep producers - from great to small - is a desire to sell their products quickly.
And in order to sell products quickly, one must undercut the current market price.
This dynamic has been a driving factor in the eRep market forever.
Plato has implemented a variety of strategies in past years to combat this. At one time Plato actually had a "bot" which Admin could set at a certain price point. The bot would buy up any goods (or currency!) below that point. This created a basement value and was useful for "propping up" the economy while it lasted. There were other aspects of the bot that were undesirable, but it did succeed on many levels.
A more effective approach from Plato to inflate market prices has been to create increases in product usage. +2000 energy houses, unlimited Tanking, Maverick Pack Division switching, increased health recovery... all these and other implementations have increased consumption. Increased consumption is good for inflating prices on the market.
But for any producer who relies on purchased RM for manufacturing of finished goods, the price of RM is a big deal. Some of these producers are conscious of their "bottom line" - the cost of goods sold - and seek black market goods to drive down costs so that they can continue to compete with the mindless and impatient masses selling goods at the lowest price in town.
And so Plato has finally made the change we all knew must be made: re-denominating RM. This is not the first time we've been through a re-denomination of goods. Last time the end result was deflation. I predict the same this time.
The "False Basement" Effect
One hidden advantage of cheap RM is that a 0.01 decrease is a potentially massive price drop. In the case of WRM it would represent a 25% drop. For the most part this is a totally unacceptable price decrease. However anyone who frequents the markets knows that WRM regularly appear for 0.03 and are snatched up VERY QUICKLY... in some cases by purchase bots run by citizens who have the appropriate scripts. Yes, this is a thing.
And so the cheap RM means a seller must do one of four things:
1-sell their goods on the black market.
2-sell for a loss.
3-patiently wait for weeks for their products to sell.
4-stop producing.
The one thing they cannot do is price their goods at .0399 and sell on the market. Now they can. And as soon as they do, someone else will sell for .0398. And pretty soon we will have WRM for sale on the market at .0330 or below. You'll see. Of course it will be listed at 3.3...
And then 3.29...
My Predictions
Here is what I think will happen.
1. This will not kill the black market. Black market behavior is not driven by the market. It is driven by a common aspect of human nature: greed. Greed creates the desire to sell quickly so I can get my money. Greed also creates the desire to buy cheaply so I can make more money. I am not judging it... I am simply acknowledging its existence. There will continue to be a Black Market for RM goods. This update will decrease the activity of the RM Black Market temporarily. But once Finished Goods begin to deflate as a response to the lower RM prices, the Black Market will once again grow.
2. As I mentioned already, the market price of finished goods will actually fall. As finished goods fall, so too will the market wage. I do not know how quickly or how much, but if WRM - the biggest factor in this update - decreases in value by 90% (3.9 per unit) then I'd anticipate a similar drop in Q7's and a slightly lower drop in wage - say 92% of current rates. If WRM drops to 3.5, expect greater drops elsewhere.
3. Tax revenues will fluctuate, but will likely decrease. RM is not taxed, so a decrease in the RM Black Market does not affect taxes. But lower-priced goods and lower market wages do. Do I think this is a major concern? No. But it will happen.
4. There will be tears. Just as with all of Plato's changes, people will over-react, bitch and moan, and generally behave as if the sky is falling. Grow up people, the sky has been falling around here for a long time now. We've all just gotten used to it.
Last Thoughts
What am I missing? Do you think I am wrong? Do you think this portends some other change from Plato as yet unannounced? Let me know in the comments below.
Meanwhile, keep clicking.
You may now return to your regularly scheduled clicking
Comments
Plato Update
https://www.erepublik.com/en/article/2649686/1/20
Predictions from Gnilraps
"Shut Up, your dumb."
-Pfeiffer
Again
I have nothing against the update - pretty straight forward and doesn't really bother me so far.
The only thing that bothers me is the storage space. I get it that they have to keep the storage facilities relevant and I believe a storage denomination is on the way. But come on. Its hard enough to keep the handful of new players without explaining that the 1.05 FRM they produce actually takes 1050 storage space out of their insane initial 3k storage space they receive at the beginning.
This update should have had a storage denominator part.
And yeah the market is already going crazy
Good point about the newb explain factor.
Just wait, Plato will come with the next offer right away: buy larger storage with your VISA
STORAGE SPACE PACK 9,90 €
😃
1st purpose of the rm changes IS denomination.. Ability to lower prices into selling ranges prepares sellers to do what is needed. Denom implementation demands either 'dump' or get mo storage. Peeps with mo storg snap up 'surplus quicker than bots.
aint worked a company for about 4 years...
feels good man
We need to sell for cheaper prices. Even on eUS market i need to wait for weeks to sell wep raw for 0.04.
They made mistake with so much factory discounts.
Now we have to much production without buyers.
capitalism law of diminishing returns. with time the profit from any capital investment will go down if people keep trying to add more capital! there is no solution to this. it just has to be expected that in a capitalism the consumer benefits!
carl marxs wrote about how the end result of capitalism is that all capital is worthless because it produces no profit and eventually society will own it all and everyone will be consumers! aka capitalism eventually turns to socialism!
So Plato moved a decimal two places. I fail to see how this is a big deal.
It isn't. People are just overreacting as usual.
Plato cannot into mathematics 😃
I think new change can be good for the game.
Because dead citizens offers will be delete. If in other products they clean the market we all win.
VERY good point about dead citizens.
You see far but with one eye only. This update will affect separately HRM/ARM and WRM/FRM.
Stay in touch, I will write about that too.
You are right. I look forward to your analysis
This update seems just a "nothing will change" update.
It has the potential to be "no change". I see the potential for some minor effects.
gniraps explained how the black market will get smaller now that plato is reducing the price controls on the raw materials.
like he said .07 to .06 is ~15% change in price. so prices are controlled by 15% incriments right now. to get a 3% incriment people have to sue the black market! lots of profit from arbitrage lots of black market activity!
but with 6 to 5.99 that is a 0.05% change. so now there is very little abiltiy to profit from arbitrage! o the black market produces no extra profits and so people will stop using the black market!
I always think reducing black market and third party scamming a net plus!
It'll just keep the price of goods with less fluctuations which is a good thing
Yet just a minor but necessary update which should have been done years ago
I agree that the update was necessary. I don't know if there will be less fluctuation. But I do think there will be overall lower prices.
You seem to be writing just for the sake of putting an article out there, and getting some votes due to your rank/level and putting forth a somewhat unpopular opinion(Completely regardless of how correct/logical that opinion may be). It's a trend with your previous articles too.
Take a break. Write when you have substance.
Just my $0.02.
I'm surprised to hear you say that.
This article is timely, ignores the obvious and focuses on my own personal predictions. It might not be groundbreaking, but it is substantive.
Previous article was published as a direct response to a very popular article which mentioned me and several other prominent citizens. Since I found the original article compelling on some levels but wrong on others AND since that article mentioned me, AND since I had something to say on the topic that hadn't been said elsewhere... again, I think that's substantive.
And my previous two articles were published on behalf of the WDIB administration for a contest that had at least enough merit to be awarded a Plato Foundation Gold Grant.
So I'm sure I disagree with you, but I thank you for challenging me to write better articles.
since I am the one who writes fluff articles, mostly for my own entertainment, I suspect he may have been thinking of me when he wrote that. 😃
Also, I don't even know what part of my article you consider an unpopular opinion. I have seen a couple people shouting that they think prices will rise, but I think their logic is faulty.
1 WRM is going to sell for $4.00! That's a 9,900% price increase!!! /s
1 new unit = 100 old units.
i would disagree Korosh I i believe his articles are well thought out and i also think he may have some additional insight into the game.
I think opposite...
Prices will slightly increase during time, because small manufacturers of raw materials will not be able to sell RM at marketplace everyday and by that prices of RM will increase.
Plato is not interesting at black market at all. For him is better if everythig gous through black market.
It frees up storage space I guess but that's about it.
nope. The storage on RM units is also re-denominated.
Ah, my bad.
I really wanted to write a reply, but it all comes down to "wait and see" how it all works out in the end. I know I would like to see profits being made. I shut down 30 or so arms factories a few years ago and have been sticking to production of food raw, used internally to make finished food items. I also produce about 7500 excess wep raw daily, and wait for the best price. Fortunately, I have the resources to wait.
I'd love to see a situation develop where I could actually employ the 214 workers for which I have room, but alas, I have exactly 1 worker and he/she makes q3 houses for me. I suppose using 214 workers would increase supply and again depress prices. I am entirely unclear about how the wage got up to 270ish CC in this economy, I suspect everyone is employed in making q7 tanks. 😃
wait and see, wait and see, wait and see. Making a living in eRepublic is difficult, turning a profit nearly impossible. last I checked, buying a q7 at more than 1100 gold is the CC equivalent of more than 550,000, not an easy sum to accumulate. 😃 I think I should go calculate how much I've spent on factories and mines/farms, etc. Thinking it must be in the millions, easily.
Anyway, thanks for the fine article. I endorsed the max for a report well done.
Dariuswolff
Great predictions. I think you just forgot one thing: the pre-update madness. Some people selling everything they have in a panic and others buying everything they can in a panic. I wonder if one will win over the other?
As for the change itself, I can see why this is necessary but man did they find the hard way to solve this problem. Re-denomination + new storage rules? Why not just give sellers two more decimal points to price their raw materials at, like how the monetary market has a third (and can actually calculate much smaller amounts when buying money, indicating that they're already set up for sales at fractions of a penny). This approach just seems like another excuse for people to scratch their heads at the Admins.
He "predicted" he will be the first non.dictator.potus, but he failed to deliver.
Who needs his predictions anyway??
He's a double-faced back-stabbing elitist liar.
Period.
I wondered the same thing. Decimal places solve everything.
yeah like the gold market! just add a few extra decimals! that would have been simpler i think. but i am no programmer!
Good programmers find a way to do what you ask them to do or at least explain why they can't do it or even suggest better alternatives that accomplish the same goal. Bad programmers suggest inelegant solutions because it's easier.
Considering the goals for this change and the solution they came up with either there's some underlying issues preventing coding extra decimal places that would have caused even worth damage (and was deemed unacceptable to fix), which is always a possibility with this game, or they just didn't think it through. Or perhaps some bozos ran the project.
Yes, you have it!
Deflation will occur but be minimal. There is a lot of stockpiled raws out there and they will undercut each other for awhile, but once the glut is gone things will stabilize. After all worked out, deflation will be minimal.
voted 😃
The real problem could easily be solved by restricting the number of times an establishment owner may work as a manager. I could go full out and produce very much larger amounts of product by simply buying more companies, but if restricted, like it is in the houses and air munitions, it would be futile. You would have to employ others to produce for you. This alone would deflate the markets rapidly and perhaps bring them into some kind of balance where profitability would have to be a calculation you made prior to producing.
The above suggestion is bound to piss everyone off, I am sorry for that, but I feel compelled to speak to the truth and not for my own benefit.
Dariuswolff
Then we would have shortages and the prices would shoot sky-high, Darius.
for a bit. They would become stable fast enough. The point of any economy is not the number of units, bit their value.
Read below, please:
I am one who agrees with you.
WAM is terrible.
I have no way of proving this, but I figure that there are more companies in the eWorld than there are workers. It would be interesting to see something like the following:
Assign all companies a number of work slots based on the available work pool. So let's say there are 10K available workers in eRep. Now reassign each existing company accordingly. Your RM factory no longer employs 5 but 1.1 worker. Your Q7 factory no longer employs 10 but 2.2 workers, and so on.
Then stop making more companies available. Instead, form some kind of an auction system. Anyone who wants a company can place a bid. If a company owner wants to sell, he sells to the highest current bidder.
I don't know, i'm literally just spitballing. But one way or another there is a major problem with respect to the number of extant companies and the number of available workers.
STORAGE EXTENSION PACK 9,99€ coming in 3, 2, 1, .....
👿
Not sure why you think so. This update does not affect storage facilities in any way. If anything it just increased everyone's potential storage by a whopping 9 RM units worth of space.
They have to make a living someway, Phil.
True.
I would also forbid the idea of commune. no person may work for any entity for less than 95% of the prevailing wave as set by the top offer at the market.