The Erep Economy, Part I
Day 1,619, 11:39
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Published in USA 
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by
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by Rigour6
Today we begin a series of articles on the Erepublik Economy. These are NOT articles for newb players, although they can still benefit from reading them. Comments and questions are welcome.
The series is in 4 parts:
Part I: (today) Oversupply, its causes and effects
Part II: 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
The Erep Economy Part I: OVERSUPPLY, ITS CAUSES AND EFFECTS
A few days ago gold was trading in the 1800 range in the US.
A couple of weeks ago it was in the 1600 range.
Today it’s in the 2100 range.
What’s happening?
Erepublik is, among other things, an example of how Command (as opposed to Market) Economies don’t work. Or, more accurately, how a Command Economy responds to (and requires) continual central intervention to keep it churning.
Not that long ago, there was quite a robust market in Erepublik, both in domestic and imported goods, and in various currencies – as well as the natural black market which arises when taxes and/or tariffs are introduced. However, we must always remember that the (understandable) goal of the Admins of Erep is to make (real world) money, not run a compelling market simulation.
In pursuit of this goal, the Admins have sought to make a simpler market, one which is more accessible to the new player and one which places a greater value on purchasing gold.
In earlier iterations of this game, there was a limit on how much you could produce, because production was dependent on the number of employees and you couldn’t work your own lands. When that was changed, there was an explosion of real estate development, as people became “self-sufficient” in food and weapons.
Today, that “path to self-sufficiency” is one of the early learning curves for the new player, and articles have been written to lay out what is the optimal course to feeding yourself, then supplying yourself with increasingly better and better weaponry.
However, because of the distribution of the player database, “self-sufficiency” really spelled the death of the markets. Simply put, most experienced players produce more food and more weapons than they can use (This is a key point, which we will return to later), and there is a woefully too small market among new players to ever purchase the excess – particularly when you consider that a newbie’s optimal path to self-sufficiency is to purchase NOTHING, and save their money for future land development rather than consumables.
Leaving aside the opportunity costs for a moment, let me tell you what it costs me to make a Q5 tank: NOTHING.
I build the tanks with my own labour in my own factories with raw materials I mined from my own mines.
In order to be able to do this, I eat food which I myself make from the raw materials which I myself had harvested. Every day in erepublik, I end up with more food and more weapons than I could possibly use.
In this I am certainly not unusual.
It is important to understand that in a situation like this, supply is vastly outstripping demand, and the natural result of this is that prices will fall. But in an artificial world like this one, there is no “break-even” point in the market, no point at which it would be better for me NOT to make food and weapons.
In short, there is no basement price in a market like this.
I recall in an earlier iteration of this game, I bought several hundred Q1 pistols for 7 CENTS each,
which was a fraction of the cost of the raw materials which went into them.
To repeat: there is no logical floor on prices.
The only “floor” which appears to exist is provided by platobots, automated buyers from the admins which carve off portions of the excess in the market and try by doing so to keep us all motivated and thinking that we can become more prosperous in this game by converting static gold into dynamic, wealth-producing factories.
SR Volume 6, Number 1
Coming soon: Part II: Platobots and the Motivations of Their Masters
The series is in 4 parts:
Part I: (today) Oversupply, its causes and effects
Part II: 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
The Erep Economy Part I: OVERSUPPLY, ITS CAUSES AND EFFECTS
A few days ago gold was trading in the 1800 range in the US.
A couple of weeks ago it was in the 1600 range.
Today it’s in the 2100 range.
What’s happening?
Erepublik is, among other things, an example of how Command (as opposed to Market) Economies don’t work. Or, more accurately, how a Command Economy responds to (and requires) continual central intervention to keep it churning.
Not that long ago, there was quite a robust market in Erepublik, both in domestic and imported goods, and in various currencies – as well as the natural black market which arises when taxes and/or tariffs are introduced. However, we must always remember that the (understandable) goal of the Admins of Erep is to make (real world) money, not run a compelling market simulation.
In pursuit of this goal, the Admins have sought to make a simpler market, one which is more accessible to the new player and one which places a greater value on purchasing gold.
In earlier iterations of this game, there was a limit on how much you could produce, because production was dependent on the number of employees and you couldn’t work your own lands. When that was changed, there was an explosion of real estate development, as people became “self-sufficient” in food and weapons.
Today, that “path to self-sufficiency” is one of the early learning curves for the new player, and articles have been written to lay out what is the optimal course to feeding yourself, then supplying yourself with increasingly better and better weaponry.
However, because of the distribution of the player database, “self-sufficiency” really spelled the death of the markets. Simply put, most experienced players produce more food and more weapons than they can use (This is a key point, which we will return to later), and there is a woefully too small market among new players to ever purchase the excess – particularly when you consider that a newbie’s optimal path to self-sufficiency is to purchase NOTHING, and save their money for future land development rather than consumables.
Leaving aside the opportunity costs for a moment, let me tell you what it costs me to make a Q5 tank: NOTHING.
I build the tanks with my own labour in my own factories with raw materials I mined from my own mines.
In order to be able to do this, I eat food which I myself make from the raw materials which I myself had harvested. Every day in erepublik, I end up with more food and more weapons than I could possibly use.
In this I am certainly not unusual.
It is important to understand that in a situation like this, supply is vastly outstripping demand, and the natural result of this is that prices will fall. But in an artificial world like this one, there is no “break-even” point in the market, no point at which it would be better for me NOT to make food and weapons.
In short, there is no basement price in a market like this.
I recall in an earlier iteration of this game, I bought several hundred Q1 pistols for 7 CENTS each,
which was a fraction of the cost of the raw materials which went into them.
To repeat: there is no logical floor on prices.
The only “floor” which appears to exist is provided by platobots, automated buyers from the admins which carve off portions of the excess in the market and try by doing so to keep us all motivated and thinking that we can become more prosperous in this game by converting static gold into dynamic, wealth-producing factories.
SR Volume 6, Number 1
Coming soon: Part II: Platobots and the Motivations of Their Masters
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Comments
Missing old eRep?
http://www.erepublik.com/en/article/for-those-of-you-who-miss-the-old-erepublik-2020246/1/20
v+s. good article.
wonder if they have thought of introducing "win" conditions such as reaching certain levels of wealth or historic damage or strength or rank. Individual "win" conditions would effectively begin decapitation of the player pool and increase incentive for new gold buyers who would be chasing fixed targets.
@oliver: that strikes me as unlikely. The high level players in many cases represent "super-consumers" the core purchasers of gold in the game. My guess is that a graph of gold purchasers shows a huge group with no purchases, a small group with a one-time purchase, and then 90% of the gold bought by repeated large purchases from those high level members. A level cap or win scenario would decapitate the revenue stream.
voted
voted nice article