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Aindrias
Amarr Labteck Corporation LTD. Libertas Fidelitas
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Posted - 2008.01.20 11:15:00 -
[31]
The reason why people have to buy stuff is because they can't make it themselves. Nowadays everyone has a miner or industrial alt to do their free bidding (it's slavery i tell you! ) so those trying to make a living are competing for a much smaller market of those that don't have an Army of Alts (tm) hence margins fall.
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JabJabVVV
Reikoku Band of Brothers
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Posted - 2008.01.20 11:24:00 -
[32]
Originally by: Aindrias The reason why people have to buy stuff is because they can't make it themselves. Nowadays everyone has a miner or industrial alt to do their free bidding (it's slavery i tell you! ) so those trying to make a living are competing for a much smaller market of those that don't have an Army of Alts (tm) hence margins fall.
Not true; you only have to look at the market data for a few items available in Jita to see that the volume of sales for almost everything has increased dramatically over the last year (with the rising player base I assume). ----------- When I was a n00b, I spake as a n00b, I understood as a n00b, I thought as a n00b: but when I became pr0, I put away n00bish things. |
Aindrias
Amarr Labteck Corporation LTD. Libertas Fidelitas
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Posted - 2008.01.20 11:25:00 -
[33]
Quote:
Not true; you only have to look at the market data for a few items available in Jita to see that the volume of sales for almost everything has increased dramatically over the last year (with the rising player base I assume).
I didn't say volume, I said margins ;-) PROFIT MARGINS ;-)
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JabJabVVV
Reikoku Band of Brothers
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Posted - 2008.01.20 11:29:00 -
[34]
Originally by: Aindrias
I didn't say volume, I said margins ;-) PROFIT MARGINS ;-)
You also said that the market has shrunk when it has, in fact, grown (not to mention that a smaller market does not mean inherently lower profits). ----------- When I was a n00b, I spake as a n00b, I understood as a n00b, I thought as a n00b: but when I became pr0, I put away n00bish things. |
Cpt Fina
Mutually Assured Distraction
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Posted - 2008.01.20 11:29:00 -
[35]
Originally by: Anna Sofia Edited by: Anna Sofia on 20/01/2008 10:44:34
Originally by: Cpt Fina Edited by: Cpt Fina on 19/01/2008 18:17:49
Originally by: Hannobaal
Originally by: Cpt Fina
That's assumtions you make when looking at a free market with perfect competition.
I don't however believe Eve is a market of that character.
On the contrary. Eve's economy is a lot more like that than reality could ever be.
Well, the free market with perfectly competitive conditions can't be found (or are very rare) in the real world. It's merely a tool, a theoretical model, one uses for studying a vareity of markets.
Eve's market don't live up to the three basic criteria that have to be met to classify it as a perfectly competitive market.
Edit: And please quote me or provide a link to where I said that there are a RL example of a market that are more of a perfect competition-market than Eve. If you can't then remove "on the contrary" since nothing in the quoted segment implies such a thing.
well.... not everything has perfect competition, but I'd say that most of the t1 items in the game is "unprofitable" due to the fact that the market structure leads to a perfectky free market -eve's market has low/none entry barriers -there is practically unlimited amount of producers -you can shut down production and your variable costs will be disappear in an instant
Dunno what more you're looking for?
edit: hangover typos
No, not even the T1 market is a perfectly competitive market in the normal meaning... even if it's easy to think so.
Price taking - Producers and consumers take the price as given. Since each producer and consumer buy/sell such a small part of the market it will have a microscopic effect on the price. Therefore producers and consumers should take the marketprice as a given, not something they can affect. In Eve there has been numerous examples of people trying to manipulate the marketprice by buying up a large amount and then reselling at a higher price. Now whether this has been successful or not isn't what we're looking at. The price on a certain item in Eve is not given, but can be manipulated.
Product Homogeneity - All products should be perfect substitutes to eachother. No company can raise the price of their product without losing all or most of its business. You shouldn't be able to differentiate a product from your competitors. Neither product attributes nor services that comes with the product. In real life there are very few products that are truly homogenous eg you can differentiate your wheat by organic farming thus you can sell it for a higher price. The products on the traditional regional eve-market are homogenous but you also have a more private market where you can provide services along with the products. Such as an exclusive, reliable and continous cap-production maybe in combination with a NAP. Or the offer to haul products to the buyer.
Free entry and exit - Buyers can easily switch from one supplier to another and producers can easily enter or exit a market. Yes, you have very low obvious entrybarriers on the T1-market in Eve but there are some that aren't as obvious. While skilltraining is one of the smallest entrybarriers the source of resources (and maybe productionslots) are harder to overcome. An organized, skilled producer with special agreements with resource-suppliers will be a pretty effective barrier when he can produce the modules cheaper than the newcomers.
Even though these three assumptions doesnÆt hold for the Eve market it is still a very competitive one and obviously more so than many RL ones. Can one apply the tools for a perfect competitive market on Eve or not? IÆm not sure. What I am pretty certain of though is that the Eve market doesnÆt meet all the criteria of being a perfectly competitive market to a full extent.
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Ris Dnalor
Minmatar Ama-gi
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Posted - 2008.01.20 11:37:00 -
[36]
i of late have found that i can purchase many items in hi security space for less than the material cost to build them. I attribute this to the fact that building things is too easy and peoples characters can start building things long before the players are really ready. They think that minerals and components are 'free' because they mined them or otherwise acquired them themselves rather than purchasing them. The fact is I see many ppl building and selling things at prices so low that they could've just sold the components on the open market and made more isk with less work.
This does, however, mean that I can run to hi sec, buy up a load of items, take them to a low sec area where the market is underdeveloped and sell it all for 2 to 3 times what i paid for it. If you can no longer build & sell for profit b/c people are selling to cheap, then adapt and wait for them to go broke, and in the mean time, profit from their lunacy.
tralala -- No love for the Matari |
Aindrias
Amarr Labteck Corporation LTD. Libertas Fidelitas
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Posted - 2008.01.20 11:40:00 -
[37]
Originally by: JabJabVVV
Originally by: Aindrias
I didn't say volume, I said margins ;-) PROFIT MARGINS ;-)
You also said that the market has shrunk when it has, in fact, grown (not to mention that a smaller market does not mean inherently lower profits).
If we had Companies in the tradition sense, you would correct. Since however we don't pay wages to our alts and we have 3 - 5 toons working to supply 1 with ISK. That guy isn't going to "go out of business" if he only makes 5mill instead of 10mill on the BC because his alts aren't going to whine about their wages. They will price cut until they are blue in the face to compete with "that guy over there".
The consumer loves it and buys more (that's the volume increase). More subscriptions does not mean more "players", many of them could be alts who do not circulate ISK in any direct way for any amount worth while.
Standard Economics does NOT work here.
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Hellspawn666
Minmatar Master Miners
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Posted - 2008.01.20 14:00:00 -
[38]
Isk can still be made producing things since its all about location, plus 0.0 markets still carry a very nice profit and easy enough to fill up with a freightor or mom. However often i would admit that your making the isk trading rather then building since you could of brought the item for a simular price elsewhere. But the rule still stands people will pay a few extra mil not to travel for it and certainly a couple hundred K.
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Janu Hull
Caldari Terra Incognita Dark Matter Coalition
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Posted - 2008.01.20 14:42:00 -
[39]
Given the complexity of the system, it would be nice if there were some way of allowing crafter skill to enter into the final item quality. Standard output crafting systems inevitably reach this point. Even if it were a random chance to turn a certain percentage of output items as their "named" supergrade types, it would be a start to giving crafters the ability to differentiate themselves from each other.
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Kazuo Ishiguro
House of Marbles Zzz
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Posted - 2008.01.20 14:51:00 -
[40]
There are still plenty of modules where there isn't so much competition. There's at least 1 item of which I'm currently the only supplier. My research services Spreadsheets: Top speed calculation - Halo Implant stats |
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Marine HK4861
Caldari Seoltachd
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Posted - 2008.01.21 00:10:00 -
[41]
Originally by: Cpt Fina
Now, did I make the assumtion that this was the case in Eve. Did I or did I not say that "This is however not the case in Eve"? Maybe I said that this was the case "on a free market with perfect conditions"? Is that possible at all?
My apologies, I've only just managed to read the rest of the thread.
You've stated that a free market with perfect conditions will result in the price dropping to the manufacturer's cost price and that this is a theoretical model. Please correct me if I'm wrong, but I can't think of a single real life example where the market is even close to this model, due to some form of government interference (raising the import tariffs to stop cheap overseas goods flooding your market and putting all your own producers out of business for example).
Given that EVE has no such outside influences (barring station owners who raise sales taxes in their outposts), wouldn't the EVE market be far closer to this theoretical model than the real world market?
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Space Jim
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Posted - 2008.01.21 22:03:00 -
[42]
Quote:
This (and similar reasoning) is fine logic for a trader but not for a producer. If you cannot sell the item you produce for more than the lowest commonly available price then the item is not profitable. If I can make rifters (for example) for 150k and sell (or buy) them in Jita for 100k and sell them in Torrinos for 800k then the item is profitable to trade but not profitable to produce. Producing is not the same as trading. Very few items now make decent reliable profits; most items from T1 ammo all the way up to HAC's are now poorly profitable at best to produce (even if they are profitable to trade).
I think one of the main reasons that has only been lightly touched on so far is the speed with which producers can react to changing markets. I can start or stop production of almost any item within 24 hours, this puts the minimum loss for a poor/unlucky producer to 1 run of the item and makes for almost instant reaction time. If factories had scaling costs for the amount of items you wished to produce then I think production would be more interesting. ie. if you want to produce 1 rifter it costs you 50k in factory costs (ie adds up to 50% to production cost) but if you want to produce 1000 then it costs 5k per rifter. This would: increase differentiation in production costs based on your bravery; increase risk; generally make the market more interesting (I think) and would more accurately reflect the real world (one of jobs cost more) though this last point is, of course, not too important as Eve is not the real world.
I think this is a really good idea, even if the amount of mats saved was nearer a 5% discount for max runs compared to 1 run, It would add a new deimsenision for bulk producers to make better margins and make T1 industry more fun and to make the market better.
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Cpt Fina
Mutually Assured Distraction
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Posted - 2008.01.21 22:52:00 -
[43]
Edited by: Cpt Fina on 21/01/2008 22:53:11
Originally by: Marine HK4861
My apologies, I've only just managed to read the rest of the thread.
No problem.
Originally by: Marine HK4861
You've stated that a free market with perfect conditions will result in the price dropping to the manufacturer's cost price and that this is a theoretical model. Please correct me if I'm wrong, but I can't think of a single real life example where the market is even close to this model, due to some form of government interference (raising the import tariffs to stop cheap overseas goods flooding your market and putting all your own producers out of business for example).
Indeed, as I wrote earlier in this thread such "perfect competition"-markets are hard (some claim impossible) to find in the real world. The commodities-market (like wheat and copper) comes pretty close though. The perfect competition-model are however vital as a model when using allot of economic tools.
Originally by: Marine HK4861
Given that EVE has no such outside influences (barring station owners who raise sales taxes in their outposts), wouldn't the EVE market be far closer to this theoretical model than the real world market?
Tax is usually a supplement for a market imperfection, which in turn creates an excess burden. And as far as I know itÆs more of a sign of that a market is less ôfreeö/ more regulated than a sign of it being non-competitive. But just like you say, Eve is a good example of a market that is very competitive. That said, I highly doubt itÆs a perfectly competitive market. The question is who well you can apply the model of ôperfect competitionö on the Eve market.
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