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Acharis

Market (supply and demand)

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A medieval browser MMO. There are kingdoms and each kingdom has a market (by market I mean an economic ecosystem with prices, not a building).

There is a list of goods, each has a price (no difference between selling and buying price, just one price). Each player can sell/buy any amount of any goods, there is no track keeping on availability of goods, just the price. Every 8 hour the game compares the volume of sell and buy transactions in the last 8 hours for each good and adjusts the price (more sales - price goes down, more buys - price goes up).


Do you see any weak points of the system? Especially possible system abuse and price manipulation by the players?

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A player could move goods back and forth between kingdoms. A player could buy all of a resource type from a kingdom, and sell it to another. After 8 hour tick, prices will have dopped in the kingdom you sold to, but increase in the kingdom you sold from. You can now sell it back for large profits. 8 mour hours, and situation is reversed.
I assume there will be many players, and they would buy all goods from the markets and sell the specific goods types to the kingdom that offerse the best price.
Your idea is quite unstable.

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OK, for simplicity let's assume there is only one kingdom (I could make high transaction costs for inter kingdom trade).

With one market you can still do the same trick I guess, just not selling but stockpiling and waiting for the price change... I think there need to be some track of goods volume in a longer period. And some transaction costs (like sale tax) so buy and sell price is not identical.

Maybe base the price on all transactions in the last 30 days? Althrough then the price might be a bit too static...

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...there is no track keeping on availability of goods, just the price.


Economics is driven by scarcity I don't think there's really much way to prevent people gaming the system if there isn't a limited supply of goods.

The best implementation I've seen without scarcity was Age of Empires II, an RTS. In AoE2 anyone who built the market building could buy and sell stone, gold, and lumber. Every time a commodity was bought the price when up, every time a commodity was sold the price went down. All players had the same prices and they were updated instantaneously.

Tracking commodities wise, I think the best implementation I've seen is an auction-house style free market where players set their own prices, succeeding or failing based on demand.
Over the past week I've been watching the market for a particular pet on WoW, and seen it's price rise up to 50 gold, then plummet to 27 when more suppliers entered the market. That's exactly what basic economics says should happen, and given enough time the market will stabilize to the "ideal" price.

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[quote name='Acharis' timestamp='1318624188' post='4872663']
...there is no track keeping on availability of goods, just the price.


Economics is driven by scarcity I don't think there's really much way to prevent people gaming the system if there isn't a limited supply of goods.
[/quote]But the scarcity is represented by high price, not by lack of goods. It's not that there are no diamonds in shops for you to buy, it's that their price is very high and you can't afford them :)
In any real market (except a really, really tiny one) you can always buy whatever you desire, as long as you are willing to pay the price.

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[quote name='ShawnCowles' timestamp='1318679529' post='4872802']
[quote name='Acharis' timestamp='1318624188' post='4872663']
...there is no track keeping on availability of goods, just the price.


Economics is driven by scarcity I don't think there's really much way to prevent people gaming the system if there isn't a limited supply of goods.
[/quote]But the scarcity is represented by high price, not by lack of goods. It's not that there are no diamonds in shops for you to buy, it's that their price is very high and you can't afford them :)
In any real market (except a really, really tiny one) you can always buy whatever you desire, as long as you are willing to pay the price.
[/quote]

True, I guess I was thinking more of preventing cross-kingdom trade abuse. If I move 500 diamonds from Kingdom A to Kingdom B I most likely wont make a profit trading them back. But if the prices for diamonds in Kingdom A keep low (because they are being produced there) I could do regular trades between markets, forming a trade route.

I suppose you could have the same effect just with prices. I'll have to think upon it some more, I guess.

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I have thought of using the same idea for an economy model and realize it can be abused depending on how you calculate the way the price fluctuates.

Example 1,
Fixed amount changes.
If you move the price up or down by 1% depending on the volume.

If given enough resources I will corner the market and just making sure selling volume > buying volume continuously for a period of time until the commodity I am targeting hit the bottom say 1 gold/unit.

From then on the market for this commodity is controlled by me, I can just buy in bulk whenever I want and just profit from having such a cheap supply (with occasional manipulation to keep it rock bottom).

This may be prevented if your market is big enough to prevent a particular player from cornering one commodity in one market.

Example 2,
Percentage amount changes.
Slightly harder, but still achievable you just need a longer period of time to drive the market down.

Suggestion,
Keep track of scarcity of goods, then move the prices based on availability of goods in meeting this demand.

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But the scarcity is represented by high price, not by lack of goods. It's not that there are no diamonds in shops for you to buy, it's that their price is very high and you can't afford them :)

My God!! No.
There actually are intentional attempts from individuals with dominance in the market or powerful influences try to alter the supply in order to keep prices high. Diamonds is exactly that case.

But commonly, it's the other way around, it's because there are not enough diamonds in the shop that the price is too high.

In the basic microeconomic model (which is really, really simplified; but the principle still drives it), the price is driven by the maximum profit the seller can make. Which means the equation Price - Cost = Maximum.
The diamond shop will prefer to sell 900 peanuts at $200 each, rather than selling his entire stock of 1800 peanuts at $50 each. He could try selling at $80 each, but then he may only sell 1000 peanuts. It's called elasticity (see demand's elasticity).

900 * 200 = $180.000
1800 * 50 = $90.000
1000 * 80 = $80.000

More units solds != more profit.
But in the end, elasticity is indirectly driven by scarcity; elementary goods like food are highly inelastic because of their scarcity and lacks of substitutes; while goods like diamonds are highly elastic.

But we've just analyzed it from a demand perspective.
Seeing it from the supply point of view is a whole different side (see how availability of raw materials is listed as one of the determinants).

If the owner can sell his entire stock of 1800 peanutes at $30 each, and he can still sell them at $40; he'll sell it for $40.
If his stock is now 20.000; and he invested an insane amount of money, he'll need to recover it, and may end up selling it as fast as he can at the lowest possible price.

How this all plays depends on the market you're in. Monopoly vs Perfect Competition; and we're usually in the in between.
If you look at Real Life (tm), it uses a market closer to a monopoly (try counting how many CPU makers are, how many dominant GPU vendors exist, how many milk derivatives manufacturers exist that don't actually all belong to the same company, etc); but I recommend you to implement a more perfect competition system because it's the one everyone understand most, it's usually more fair (specially in a video game!, where you want to prevent frustration) and we somehow tend to think reality resembles more to a Perfect Competition (may be we're naive? light hearted?).

Cheers
Dark Sylinc

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I have thought of using the same idea for an economy model
Have you managed to make it work?


But commonly, it's the other way around, it's because there are not enough diamonds in the shop that the price is too high.
There is always enough diamonds in the shop, if there is not, it means the shopkeeper is incompetent and put the wrong price tag :) The price determine if you can buy it or not, not the lack of goods on the shelves.


Hmmm, maybe make the game act like a merchant? The game puts on sale X1 goods on price Y1 and is willing to buy X2 goods for price Y2 (so the player can both buy and sell the same good, just the price is different). When the game sells the quota, you can't buy it until the next cycle. Also, it keeps the goods warehouse. So, initially there are 0 goods on the market, then players produce and sell some and the next cycle after they sold it the game put it on the market. The game could even keep the "average acquire cost of the good" and never put on the market anything for less than "average acquire cost +5%".

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Depends what you are trying to achieve. I've played a couple of games with a central market and they can be quite easy to manipulate. Evony is an example of one I played ages ago where I quickly learned I could make as much money as I wanted by just buying and selling the same commodity over and over again. All I had to do was for examples set a buy order for 1 million iron at a price of .3 and then a sell order for 1 million at .7, after they are completed I just repeat as needed. After a couple of days I had more gold and resources then I could possibly use.

If you are going to let players trade large quantities of goods through a central market there will be plenty who will use to make money through price manipulation

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