A small lecture on eRepublik's economy.

Day 2,007, 10:59 Published in Poland Poland by Jan Marten

Polska wersja: http://www.erepublik.com/en/article/2263797/1/20

Hello all,

I look into the economy of our game from time to time.
As you know, it's difficult to attribute the economic module to anything. Many would claim it's not really possible to change anything about it nowadays. And they would be right. Nevertheless, I'll explain my point of view to you and present simple solutions.

1. Description of the current situation.
You don't have to be a genius to see what the economy looks like. Tons of FRM, WRM, foods and weapons available on the market are apparent if you look on the sheer amount of pages in the marketplace section. This happens because game creators provided everyone with the possibility to build their own firm. What's worse is you can work in not only a manager, but also as a regular employee.

2. Consequences of the current solution.
As a result, a lot of one-man-companies appeared. Working in such companies is practically free. The only loss is that of energy, which is renewable (10 points per 6 minutes), and eating food which won't be sold. That actually counts as production costs. Everybody disregards that, as all in all it does not influence the price of produced goods.

3. Efforts to change the situation and slow down falling prices.
The game creators attempted to buy out products from the market. That was their biggest attempt to somehow control the economy. The only result of their actions was that more companiest appeared and prices were set for products they were buying out. The majority of eRepulik's economists believed, however, that keeping balance between prices of gold and of currency infuenced the economy in a more negative way. For players who at the time owned their profits to currency trading it was an important problem indeed. It should also be taken into account that a couple weeks prior a limit has been put on the amout of gold sent between accounts or bought on the market. The limit is 10 gold and it does not apply to national organizations.
Presently no efforts to change this situation are made. Apparently progammers are working on a new economy module, but no concrete information was provide😛 we don't know what kind of changes are to be made nor when will they be made. These days efforts are made to stop falling prices. Those effors include relatively small taxes and imposing miminal wage. In Poland minimal wage amounts to 8 PLN, and salaries on the job market are about 14-15 PLN(prior to the tournament). It seems impossible to regulate market prices with such tool. The problem is that a minimal wage can be set, but on a local, national level only. If such solution was to be imposed, it could lead to players leaving the country, which in turn would cause collapse of the market. The tax income of such country would lessen drastically.
When it comes to taxes, VAT is the only income of a country. It can't be too high, because people would just sell products on the black market, and a result income would lessen and citizens would leave the country.
Such mechanisms could only take effect on a global level under one condition: that countries trust one another. This is, of course, impossible.
Situation on the market is improved by various features like new missions or events like this on day 2000, but it is improved only on the surface. Market only seems to grow, as production capabilities are huge (and could possibly be bigger). So it only works in the short run.

4. Suggestions of change for the current module.
Unfortunately an ordinary player can't do anything. It is possible, however, to change the mechanics of the game. As I mentioned in the begining, huge production capacity and overproduction is the main problem. In the present situation everybody owns so many firms, most often raw firms, that they produce raw materials for themselves and, additionaly sell the remaining WRM. Some only produce WRM, as they can't afford a weapons factory of higher Q, that would allow them to profit. Limiting the amout of WRM that one worker can produce would solve the problem.
At the moment a worker can produce the following amount of raw materials (bonuses not included)
Q1 - 35
Q2 - 70
Q3 - 125
Q4 - 175
Q5 - 250

My suggestions are:
Q1 - 1
Q2 - 2
Q3 - 3
Q4 - 4
Q5 - 5

It seems quite drastic. I will explain why later.

For this solution to work, it would be necessary to increase the amount of raw materials needed to produce 1 product.
Raw material neede for foo😛
Q1 - 1
Q2 - 2
Q3 - 3
Q4 - 4
Q5 - 5
Q6 - 6
Q7 - 20

To produce 1 weapon we nee😛
Q1 - 10
Q2 - 20
Q3 - 30
Q4 - 40
Q5 - 50
Q6 - 60
Q7 - 200

Mysuggestions are:
Q1 - 100
Q2 - 200
Q3 - 300
Q4 - 400
Q5 - 500
Q6 - 600
Q7 - 2000

5. Short-term consequences.
In the beginning weapon and possibly food reserves would be absorbed. One would also be able to notice a tempory reduction in production of those items. That would last until producing goods is more profitable than selling them. Prodution would collapse, it simply woulnd't pay off. Smart businessmen would buy companies during ths time, when they're cheap. They would also keep them, which would mean rise of unemployment. The amount of offers to sell raw materials would then decrease considerably. The less weapons available on the market, the faster would raw materials disappear. Employing could bring short-term profit (large unemployment would cause lower wages and prices of raw materials would at some point grow as everybody would buy them).

6.Long-term consequences.
Market collapse will last until there's not enough weapons on the market or price of weapons is unattainable for a regular player. If, at this stage, someone produces weapons, price will start falling again. That means profits will be kept at minimum, so that the firm still can be supported.
A simple cycle will be created. A cycle that has been broken. Weapon production will diminish the market for WRM. WRM market will try to recover losses in different ways: by buying new raw companies or by employing workres. Employing could be profitable in the beginning.The momentary excess of raw materials will contribute to lowering of prices. Raw materials will be bought by firms producing goods.

7. Problem of solution.
Proportions I suggeste😛 very liitle raw materials available on the market and lots of raw materials needed for producction, will only mean one thing: there will be just one way to malke up for WRM defficiency on the market. Buying new raw companies will be the only profitable thing to do. At the moment the maximum number of firms that pays is a little less than 240. We have 2400 free energy per 24h, working takes 10 energy points. If we take training into account (4 training grounds, -10 energy points each), and we produce our own food (that's about 4 firms: 3 producing raw materials and one food company, - 10 energy point each), 2320 energy points remain. That means the maximum of 232 raw firms. Even that many firms may just not be enough, even considering that some will just work and not fight. As a result most players will be forced to buy weopns of lower Q while only some (probably only governments) will be able to buy weapons of the highest Q. This situation, as same of you recall, is similar to that at the beging of the game, before V2 was introduced, before great booms in Poland, France or Spain.

8. Would there be unemployment?
Of course there would initially be considerable unemployment. It would soon fall because people would again get employed in weapon companies. Some or possible most would buy their own firms and profit from selling WRM.

9. Currency.
Many players would probably buy raw firms for currency, as they wouldn't be able to afford best companies (worth 35 g). This would cause considerable currency outflow from the market. Currency would also be more solid in comparison to gold. This would mean repetion of pre-V2 state when 1g cost 30-50 PLN. For those playing on the market it could be at some point a good idea to buy an energy bar to work in more raw companies and gain more. A similar thing happened when the possibility to buy companies for currency was introduced (couple weeks afer V2 fell).


Feel free to discuss. Maybe you'll come up with some interesting ideas.


Regards,
zbychoo