Economic Predictions - Latest Update

Day 3,573, 08:16 • Published in USA USA • by 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.



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