The Economist ~ A very brief note on inflation

Day 4,108, 03:13 • Published in United Kingdom United Kingdom • by Spite313
Please vote and subscribe


Dear friends,

I just wanted to drop a very brief note in about inflation as I’ve seen quite a few comments/articles/posts/mails about it. Inflation is described as a sustained increase in the cost of goods and services over a period of time. In the case of eRepublik, you will all have noticed that Q7 tanks and houses of all qualities have risen in costs over the past 6 months. In addition, food and raw materials have also risen in cost (overall) though at a less steep rate.

In order to understand how inflation works, you have to first of all accept that all parts of the economy are linked. This is because houses and Q7 weapons both use work tickets in order to function, and work tickets are by their nature a finite resource. This means that however they are allocated, if demand for work tickets exceeds supply, then the value of a work ticket will rise as different people compete over the resource. This means that wages will go up so long as the demand for houses and Q7 weapons, and therefore the demand for workers, exceeds the available supply.

In the real world this is sometimes described as built-in inflation, as workers constantly up their wages and the increased cost is then passed on to consumers. In the real world this usually only affects a small part of the economy at once and so it can be effectively countered in various ways. In eRepublik, the entire workforce is effectively employed by the same industry and shares access to a common job market. Therefore the effect of built-in inflation is much stronger.

This type of inflation has the effect of creating a ‘death spiral’ of inflation, where wages constantly increase and as a result the price of products increase with it. In the real world there are two rather draconian methods used to control this: price controls and wage controls. This is where either a regulator or the government itself acts to prevent price increases or wage increases above a certain level (often both). Neither of these options is available to eRepublik governments.



The secondary impact of this in eRepublik is that all other industries are also impacted, albeit in a more minor way. This is because work tax is based on average wages, the direct cost of producing raw materials and food also increases.

Anticipating comments, most of you who own either raw materials or weapons companies will have noticed a recent decrease in weapon raw material (WRM) costs. This is likely due to a slight slump in demand and also a gradual increase in supply. Normally the market rests the price of goods as being close to the cost of production. So for example, at current wages a Q7 weapon costs around 94cc to produce with workers, and if you check the markets they sell for around 95-100cc per unit (pre-tax). However WRM costs around 2-10cc to make (depending on local work tax, bonuses, etc etc) and until recently were sold for 18-20cc.

That I expect is because of the new year event which saw a huge increase in demand for weapons, combined with the end of “the Truce”, which meant many more people were buying WRM to run factories to take advantage of increased profit margins in Q7. For a while, it was very profitable to open WRM factories (potentially 80cc per day with a single 35g Q5 WRM factory for example) and so many people opened factories. In addition we have also seen a decrease in demand due to the rather disappointing Valentines day event and the normalisation of the ongoing conflict. In other words, supply has increased and demand has decreased, meaning raw materials is trending downward towards it’s natural equilibrium point. This has caused a slight decrease in weapons prices as owners pass this saving onto customers. However this will likely go up again in the near future as wages increase further.

In the medium to long term I think only a formula change will break this spiral. However there are some possibilities which could be considere😛

1. A baby boom. An influx of cheap young labour could temporarily add supply to the job market without significantly increasing demand (most fighting involves only a small amount of old very strong accounts). Given the state of the game this seems unlikely.

2. A major cease fire. A real drop in demand for weapons could in theory curtail inflation, at least temporarily. However the almost constant training wars and the rush for ‘legend’ ranks means this would only have a small effect.

Beyond these, the only real way to change is to shift the way work tickets are generated. There are several ways to do this:

1. Allow work tickets to be traded

2. Allow houses to generate additional work tickets

3. Get rid of the 1 hour cooldown on working overtime (this means people with fewer logins could just use all their tickets at once)

4. Change productivity formulas for tanks and houses so they use less work tickets

5. Change the entire economy module so it more effectively models a real economy (my preferred option, one I’ve written about a lot but also the least likely to occur).

I hope this clarifies a few points in any case. If you have any questions, stick them in the comments.

Iain