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blankseplocked 2 EVE Economy Suggestions [From an Economics PhD]
 
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Abandoned Child
Posted - 2004.02.19 05:55:00 - [1]
 

A lot of these suggestions are based on R/L, so take them with a grain of salt.

A. Introduce Marginal Cost of Production

Some items should be MUCH cheaper to build if you build more of them at once, i.e. they should have economies of scale. The opposite case should also exist, i.e. building more of a certain item at once should cost more per item. In economic terms, the marginal costs of production should depend on quantity.

examples (arbitraty items/numbers):

1. Building 20 Battleships should cost less per ship than building 10. Maybe, this tapers off at, say 30 battleships, and then it actually gets MORE expensive at say 40, etc. Maybe time of production varies as well.

2. Building 5 Power Diagnostic Units at once costs less than Building 10 at once. Maybe it takes more time, etc.

This level of sophistication would allow for both niche manufacturing as well as global powerhouse manufacturing. The little guy can make money, and the big guy can make money, and so can those in the middle.


B. Allow more flexibility in profit equation

PROFIT = PRICE * QUANTITY * MARGIN

As it is, with the "local region market" as we have today, a seller is often limited on quantity, and over time, on margin. So, a lot of sellers just try to maximize price, i.e. everyone starts building battleships.

Suggestions:

Introduce "global" markets, but limit cross-region sales, not by limiting information as we do today, but by charging some sort of shipping costs or some sort of tax. What does this do? At least it allows for people to optimize all three variables, instead of just one.

Does this disrupt trading/haulers? Not necessarily. Shipping costs can limit the damage done. In an ideal world, the shipping costs would go to the traders, but that is a quite complicated scenario. Also, certain "tradeable" items may still be kept limited to region by region markets - i.e. the trader would have to go to the region and "bargain" with the locals.

These two changes may diversify and liven up the manufacturing aspects of this game. However, there really is no guarantee, as in the end, EVE is a very closed system, whereas R/L is far more open and robust.

Haratu
Shinie Stuff Salvagers
Posted - 2004.02.19 06:44:00 - [2]
 

Good idea, it is always good for the game to become more realistic.

Part A is a good idea... having a maximum for cheap merchandise will stop the big guys from becoming richer while having cheaper production will encourage smaller players onto the market, reducing the effect big corporations can have.

I was a bit lost on B, which means others will be too and means it would be difficult to include in the game. As far as I understand it, it is similar to the escrow system, with the addition of shipping costs that are paid by the trader. Please clarify.

Abandoned Child
Posted - 2004.02.19 07:32:00 - [3]
 

Edited by: Abandoned Child on 19/02/2004 07:41:24
Answer to question above: A global market in which different items have different shipping costs could be used to fix the problem stated below, while increasing demands. The knocks against a global market are that it would reduce margins and decrease trading activity. This is fixed by adding the shipping costs based on item, item demand, and distance. The shipping could be tuned to allow for trading on tradeable items [i.e. tax tradeable items heavily when buying across regions]. For a global market to be truly effective, you would need global transportation of goods as well. Tuning that will take some work. Eventually, the traders themselves could become the tranporters in the global market. For now, that is a pipe dream :)

C. Create Demand Modifiers Where Necessary

There are four types of Items in EVE:
1. High Revenue, High Margin [Techell Miner II]
2. High Revenue, Low Margin [Battle Ships]
3. Low Revenue, Must-Have [Shield Hardeners, Micro-warp drives, ammo]
4. Low Revenue, Niche [Energy Neutralizer]

At the moment, only #1 and #2 are, for practical purposes, profitable. Since #1 is usually created by a stroke of luck and/or monopoly, the vast majority of profits in EVE are made on items in category #2. This is why shipbuilding is TOO popular.

#3 has the potential for great profits, but is limited at presented. The number of shield hardeners a person buys is limited, to, say 5 per every ship they buy, tops. That means that the total revenue generated by shield hardeners is anywhere from 0.1 to 5% of what is generated for ships. So, you would have to sell a LOT of shield hardeners to make the same profit as you would on a ship, even with the higher margins.

#4 is explainable. Certain items just can't be profitable, and should probably be left to npcs.

So, how do we get #3 and #4 some more loving from the manufacturing community? We have to increase profits in these two categories.

To do this, we can:
1. Increase margins for these items. Make BPs MORE exclusive and less copyable for the niche items. This will limit supply, and create monopolies. The few producers of these niche items will make out allright, but not necessarily a killing [like in category #1].

2. Increase demand for these items. This is trickier. A global market would help; this would NOT ruin margins across the board, as honestly, they are already quite low for those items in #2. Shipping charges, as mentioned above, could help as well to increase demand. Another idea is to make more of these items require refills/make them have limited usage. For must-have items, this won't decrease demand much and it will boost revenues a ton.

These two are not sufficient to fix the market issues, but they will help. They will create four kinds of manufacturers for each of the item categories listed above:

#1 - Lucky/rich corporations that will be hated and affect the story line / politics
#2 - Revenue maximizing corporations, usually competing locally.
#3 - All kinds of corporations competing on price globally.
#4 - Niche specialist / monopoly corporation.

Probably, over time, #2 and #3 will meld together. I am not sure what would happen or what size corporations each favors.

Imperishable
Posted - 2004.02.19 08:17:00 - [4]
 

I think you can make categories #3 and #4 profitable by introducing NPC buyers. Each faction has massive navy fleets, but where do they get all their stuff? Why not have some NPC merchants, officials of faction navies and such buying shield hardeners and energy neutralizers? It's really not hard to do.

These NPC merchants would only buy from players, not from other NPC. They would have their own rules on what player to buy from, making decisions on price and distance.

This basically means "free money" for manufacturers of those items. However, it is justified by the fact that they are not high profit items, so players who bother making them get proper rewards for their efforts.


 

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