Imaginary Market Bump

Posted in Fun and Games, Resources at 11:13 am by justakim

I take part in a little company on Eve Online that makes really big ships. We buy lots of materials off the market, like tritanium. Please note that I am a very casual player of Eve.

So the SO comes by.
“Oh did I tell you trit prices went up?”
“They took out a loophole where you could refine shuttles for trit.”
“Price ceiling?”
“Yeah. The going rate was 3.2/unit, shuttle price was 3.6, and now it’s 4.6 or so.”
“Ew. Now what?”
“The price will come down some and we have reserves to ride it out. We’ll wait a bit for the price to come down before purchasing more.”

At first it appears straightforward:

You can either mine trit, or you can buy and refine an unlimited supply of shuttles to produce trit. You remove the trick, and people will have to rely on mining. There is a temporary spike because people have to shift over to mining, and a permanent rise in prices.

But wait! The price of trit was below the price ceiling. Normally, that would mean that the price ceiling was ineffective and irrelevant, but that is not the case here.

People who buy shuttles and refine them for trit do not interact with the market. The demand observed in the market does not include the total consumption of trit, only what is mined. Buyers who don’t refine, and sellers who mine, trade at 3.2/unit. Everyone else pays 3.6/unit for convenience or whatever. When the 3.6/unit source of trit was removed, the true demand suddenly became visible, while it will take supply time to respond. Prices spiked to ~4.6, and they will eventually go down.

However, we don’t know how far down it will go. Eve’s economist did indeed note the correlation between shuttle prices and trit prices, which is probably what led them to remove the loophole, so that gives us an idea of what the actual demand is. But there are certainly other unlimited sources of items that can be refined, and Eve players will surely find the next best deal. They probably have already.

I hope this illustrates that while economics, the study of resource allocation, can be applied to games, it can be in pretty silly ways. It also shows that people understand these things intuitively. Everyone knows that if a known and exploited loophole is removed, the price will go up, until new solutions are employed, whether it is as intended, or more likely, another smart loophole. Moreover, there are probably a thousand other details peculiar to this market that I am completely ignorant of since I am not an avid player.

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