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On the ease of crashing markets
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David MacIver RJ: DRMacIver CO: David R. MacIver Post Rating: 35 + / - Total Posts: 47 Karma: 56 Joined: Apr 5, 2012 |
Posted on Apr 11, 2012 It's not tracked anywhere (it'd be nice if it were), but as some of you might have noticed the strawberry market has crashed recently. A week ago the low end of the prices for them was around $1.00, now it's parked at $0.55 which is about the export price for 15 quality strawberries. This is, err, kinda my fault. I noticed the downward spiral that the water market hit where it basically crashed down to the price of production and decided to see if I could do the same to strawberries. It took a little bit of figuring out, but eventually I figured out the pattern that would ensure a market would crash right down to the edge of the export price (you can't crash it any lower than that obviously). At this point I don't even have to sustain it - the market has stabilized on this price and we've hit a Nash equilibrium where no one has a strategy which improves their lot and raises the price of Strawberries. There are enough high quality strawberries listed at 0.55 that any one company can't defect by raising the price and expect to be able to sell. A conspiracy of strawberry growers all agreeing not to sell below a certain price could achieve it, but that's not terribly likely to happen, and you only need one persoytn aggravated with the high price of strawberries to say "Screw you guys! I'm going to start my own strawberry farm!" to break the conspiracy. Another solution is for some Sufficiently Wealthy Company to buy up all the strawberries and resell them at a higher price (we seem to be seeing this happening with electricity at the moment with GoonPower Inc buying up any electricity priced below 0.09 and reselling it at 0.09). Although I did this deliberately, it's fairly easy for it to happen naturally. As the size of production for a market grows past the size of consumption (which happens remarkably easily) you get to a point where the only way to sell your goods is to undercut the competition, at which point the market goes plummeting to the bottom. I don't really have a good suggestion for how to stop this happening, I just wanted to raise it as an issue. Anyone else have any ideas? |
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David Stark RJ: Zarkonnen CO: David Stark Post Rating: 0 + / - Total Posts: 53 Karma: 23 Joined: Apr 4, 2012 |
Posted on Apr 11, 2012 (Last edited on Apr 11, 2012) In a way production outstripping demand is a good thing because it means that the import market is no longer needed for that item.Would it be possible to program the import market to react to such events by raising prices, decreasing quality, or discontinuing the item altogether until the glut is gone? In essence, the government of Econosia could take a protectionist stance and impose a tariff to protect local producers. |
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David MacIver RJ: DRMacIver CO: David R. MacIver Post Rating: 0 + / - Total Posts: 47 Karma: 56 Joined: Apr 5, 2012 |
Posted on Apr 11, 2012 (Last edited on Apr 11, 2012) I think by the time this happens the import market is an irrelevance. If you consider the strawberry example, it was at a tiny fraction of the import market even before I decided to crash it. Strawberries currently cost $10.25 on the import market.Edit: It's probably more relevant for pricier items, but I think anything which is produced in sufficient bulk that you can guarantee its presence on the B2B market is going to significantly undercut the import price long before this problem happens. It certainly can't be *over* the import price (otherwise you'd just buy import), and when the goods are instantly snapped up it'll only be a shade lower than the import price. Once you've hit a stable presence in the market the price necessarily has to be lower than the import price and will probably be a lot lower. |
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David Stark RJ: Zarkonnen CO: David Stark Post Rating: 1 + / - Total Posts: 53 Karma: 23 Joined: Apr 4, 2012 |
Posted on Apr 11, 2012 Good point. How about generating quests to supply these goods in large quantities until the market glut goes away? |
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David MacIver RJ: DRMacIver CO: David R. MacIver Post Rating: 1 + / - Total Posts: 47 Karma: 56 Joined: Apr 5, 2012 |
Posted on Apr 11, 2012 Government subsidies. I like it. High Fructose Strawberry Syrup here we come!
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Jayle Trigger RJ: Berry Punch CO: Applejack Post Rating: 0 + / - Total Posts: 93 Karma: 85 Joined: Apr 9, 2012 |
Posted on Apr 11, 2012 You mean export market right? Cause importing strawberries does not seem like a very bright idea, looking at the prices.And I believe the export market price for strawberries has readjusted itself to .41 - .45 cents... so you can go even lower. Also... the Unilateral Representative of New Companies (URNC) looks down upon your price crashing antics with New Company grade products. |
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David MacIver RJ: DRMacIver CO: David R. MacIver Post Rating: 0 + / - Total Posts: 47 Karma: 56 Joined: Apr 5, 2012 |
Posted on Apr 11, 2012 Jayle: You can only go even lower with lower quality products. The export price is actually the listed price * (1 + 0.01 * quality).And yeah, I only realised in retrospect that this would have an unfortunate consequence on new companies. I do feel bad about that. I only chose Strawberries because my production capacity for them vastly outstripped my ability to do anything with them due to some silly decisions early on when I was one of those new companies. Anyway, with the point proven I promise not to do it again. |
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David MacIver RJ: DRMacIver CO: David R. MacIver Post Rating: 0 + / - Total Posts: 47 Karma: 56 Joined: Apr 5, 2012 |
Posted on Apr 11, 2012 (though I think it would have happened naturally within a few weeks anyway)
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David MacIver RJ: DRMacIver CO: David R. MacIver Post Rating: 0 + / - Total Posts: 47 Karma: 56 Joined: Apr 5, 2012 |
Posted on Apr 11, 2012 Ok. In penance I've burned a chunk of money to chop the bottom off the market. Let's see what happens.
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David Stark RJ: Zarkonnen CO: David Stark Post Rating: 0 + / - Total Posts: 53 Karma: 23 Joined: Apr 4, 2012 |
Posted on Apr 11, 2012 Yeah, scratch the import/export market idea, that wasn't thought through. But quests could help. Asking people to supply lots of strawberries (and rewarding them with just a bit more money than the purchase price) would get the strawberries out of the market and the strawberry producers' loss of income somewhat compensated. Certain state-owned corporations could then put strawberries on the market at a more sane price.
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Alexandre Genest RJ: Trapt Post Rating: 0 + / - Total Posts: 6 Karma: 13 Joined: Mar 28, 2012 |
Posted on Apr 11, 2012 This could also happen to a lot of products so quests are not an option (one quest per product is not a good idea). I don't have any other solution though.
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David Stark RJ: Zarkonnen CO: David Stark Post Rating: 0 + / - Total Posts: 53 Karma: 23 Joined: Apr 4, 2012 |
Posted on Apr 11, 2012 I guess it depends on how frequently it happens. At the moment, quests are generated at a rate of two a day. If everyone/a large proportion of the player base gets the quest of "supply strawberries", that means you can easily fix one product a day.
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Fish Bike RJ: FishBike CO: FishBike Post Rating: 0 + / - Total Posts: 22 Karma: 51 Joined: Mar 29, 2012 |
Posted on Apr 11, 2012 Isn't this more or less how market forces are supposed to work, though? When there's an oversupply, the price collapses, suppliers independently decide to get out of that market over time, and eventually the excess supply dries up and prices recover.
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David MacIver RJ: DRMacIver CO: David R. MacIver Post Rating: 0 + / - Total Posts: 47 Karma: 56 Joined: Apr 5, 2012 |
Posted on Apr 11, 2012 (Last edited on Apr 11, 2012) Perhaps, but that would be a lot easier to accept if there weren't a constant influx of players driving these markets to glut!
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David MacIver RJ: DRMacIver CO: David R. MacIver Post Rating: 0 + / - Total Posts: 47 Karma: 56 Joined: Apr 5, 2012 |
Posted on Apr 11, 2012 Also the exploit for crashing markets doesn't depend on there being a glut. It works with any steady state where there's always going to be at least some of the product on the market (even if individual lots are only there for short periods of time). Gluts make it inevitable, but steady states make it easy if you're motivated.
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Roald Adriaansen RJ: Wuvil CO: Wuvil Post Rating: 0 + / - Total Posts: 146 Karma: 281 Joined: Feb 4, 2012 |
Posted on Apr 11, 2012 Funny enough this is how I make money in EvE, through manipulating the market with crashes and spikes, I'm fairly certain the same can be done here. You've figured out the crash part, you're still missing the acquire tons of cheap stuff then spike the price part and profit wildly though ;)
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