Post by danny on Mar 15, 2010 3:22:24 GMT -8
I've been thinking about how particular aspects of the game mechanics affect the economy in erepublik, particularly in places where it is inclined to be contrary to the workings of any real life economy. I've come up with the following points, which are based mainly on game mechanics, rather than my traditional economic thinking. This may be beneficial to new players. (A few of these points were edited in later on)
Increased Irrationality
First and foremost, it is essential to realise that this is the internet and not real lide. People are unlikely to behave all to rationally on the internet. Exceptions, of course, will be made for those who have spent real life money acquiring gold. However, a large proportion of the population of any country in erepublik likes the idea of running a business. However, since it is so easy to set one up, not much time is generally given to the consideration whethe any such business will be feasible to them. Consequently, a business can end up draining its creators investments without any returns. This drives downs costs, but reduces profitability for businesses operating on a more rational basis. Perhaps it would not be a bad idea to take steps to control such reckless business management.
Overproduction
In real-life economics, 'general overproduction' is an impossibility. It can only exist where demand for everything has been met. However, as soon as everyone has food and guns in erepublik, there can be a general oversupply (of Q1 goods at least). There is not much else that production can focus on at present. If overproduction of Q1 goods could be transferred into Q5 goods, thereby reducing the price, perhaps something could be done. People will then buy more Q5 goods once they become affordable to them. I don't know how such steps could be undertaken, but it seems like a good way of increasing effective demand, as demand for Q5 goods has certainly not reached its maximum. Q1 and Q5 are only used here for samples sake. Q1 to Q2 and Q2 to Q3 are, of course, more realistic examples of addressing the same problem. As this overproduction exists on a global scale in the eWorld, foreign trade cannot aid the problem as much as may be expected.
Inelastic Potential Demand
Yes, it's true that there is a certain limit to potential demand in real life, but in erepublik it is incredibly limited. The average player only has 20 slots in their inventory. Some do have 50, but I presume they are a minority. Consequently, an individual can only buy a certain number of a given commodity. This is indeed different for companies, but the amount they can sell in a given time period is limited by this principle. As potential demand is fixed to a certain point, effective demand will always be below that point. This means that effective demand cannot be stimulated beyond a certain point.
Limited Necessity
This will change with the new economic module. Bread is the only commodity that is actually necessary for an individual's survival in the game. There is no alternative. The only option is to buy bread of a different quality. Furthermore, the minimum demand for bread is inelastic. All players wishing to continue playing erepublik will generally buy one piece of bread for each day.
Lack of Variety
As mentioned above, there is no alternative good of a similar nature to any existing good, apart from those which are of a different quality. There is some price-quality trade off, but only at five different levels of quality. The only reason anyone should logically buy a certain Q of a good would be to stimulate the economy or help a party business etc. Consequently, there is a limited variety of selling points to any company which is incapable of reaching the lowest market value for a good in a particular time period. Furthermore, as bread and guns are the only thing a player without a company has any reason to buy, there is no other sector of the economy in which to invest their disposable income. This reflects a further limitation on effective demand. The lack of variety also contributes to the oversupply of a limited amount of goods mentioned above. This, however, is due to change with the new economic module.
Frequency of Combat participation
Participation in combat is always frequent in erepublik. Whether a country is at war or not, there will generally be fighting (as in Ireland). Consequently, there will always be demand for guns. Therefore, attempts to stimulate the economy through war (thereby increasing demand for weapons), while beneficial, are far too limited in scope. This is demonstrated by the failure of this program in the eUSA (It can be found in the president's newspaper)
Wellness:Gun Use Ratio
For an average player, even with maximum disposable income, the use of guns in a single day is limited. A sensible player at 100 wellness should fight no more than 5 times before healing, as this will maximise his income which can buy more guns. This equates to the use of 5 guns. The maximum number of times a player can fight at 100 wellness is 6 times (i.e. the use of 6 guns). If every player was able to afford this, they more than likely would. Whether it was training or an actual war would make very little difference. Consider again, the eUSA.
Wellness and Motivation
Clearly, motivation is not quite as fundamental to erepublik (especially among 2 clickers) as it is in real life. nevertheless, it plays a part. Players are motivated to work at optimum wellness to achieve optimum production, which will hopefully increase the amount of pay they receive from their employer. An employee receiving fixed pay, regardless of production will lose motivation to achieve optimum wellness each day and will likely fight more than is desirable. This was one of my key criticism's of lambda's fixed wage policy.
Foreign Markets
All things considered, the only surefire way to boost demand for domestic goods is to sell them below their market value in another nation. Unfortunately, this will generally be met with tariffs or embargoes, making it exceptionally difficult. It may also be detrimental to international relations, unless this country is capable of using your market for similar means which conversely reduces demand for a certain domestic good in your own market. The lack of variety means that there probably won't be much benefit from it in the current system. This is also due to change with the new economic module.
The New Economic Module
I'll give a brief overview here. You can still read the main article about it in erepublik. The new economic module will add a library and entertainment district to your elife. There will now be a certain level of demand to increase happiness and there will be more focused development of certain skills, which can be used to produce different commodities. Aspects of commodities will be combined so that it will be difficult to find two commodities alike, in the words of the admins. Consequently, there should be a niche for a certain good in a particular market at any particular moment. Rather than undercutting foreign markets and perceptively 'exploiting' them. One can find a space for a particular type of good which does not yet have a place in that market. This should avoid any negative implications for international relations.
Conclusion
This may not be entirely accurate. I'm still new after all, but this is my impression of the workings of the game economy as I understand it so far. Corrections welcome.
Increased Irrationality
First and foremost, it is essential to realise that this is the internet and not real lide. People are unlikely to behave all to rationally on the internet. Exceptions, of course, will be made for those who have spent real life money acquiring gold. However, a large proportion of the population of any country in erepublik likes the idea of running a business. However, since it is so easy to set one up, not much time is generally given to the consideration whethe any such business will be feasible to them. Consequently, a business can end up draining its creators investments without any returns. This drives downs costs, but reduces profitability for businesses operating on a more rational basis. Perhaps it would not be a bad idea to take steps to control such reckless business management.
Overproduction
In real-life economics, 'general overproduction' is an impossibility. It can only exist where demand for everything has been met. However, as soon as everyone has food and guns in erepublik, there can be a general oversupply (of Q1 goods at least). There is not much else that production can focus on at present. If overproduction of Q1 goods could be transferred into Q5 goods, thereby reducing the price, perhaps something could be done. People will then buy more Q5 goods once they become affordable to them. I don't know how such steps could be undertaken, but it seems like a good way of increasing effective demand, as demand for Q5 goods has certainly not reached its maximum. Q1 and Q5 are only used here for samples sake. Q1 to Q2 and Q2 to Q3 are, of course, more realistic examples of addressing the same problem. As this overproduction exists on a global scale in the eWorld, foreign trade cannot aid the problem as much as may be expected.
Inelastic Potential Demand
Yes, it's true that there is a certain limit to potential demand in real life, but in erepublik it is incredibly limited. The average player only has 20 slots in their inventory. Some do have 50, but I presume they are a minority. Consequently, an individual can only buy a certain number of a given commodity. This is indeed different for companies, but the amount they can sell in a given time period is limited by this principle. As potential demand is fixed to a certain point, effective demand will always be below that point. This means that effective demand cannot be stimulated beyond a certain point.
Limited Necessity
This will change with the new economic module. Bread is the only commodity that is actually necessary for an individual's survival in the game. There is no alternative. The only option is to buy bread of a different quality. Furthermore, the minimum demand for bread is inelastic. All players wishing to continue playing erepublik will generally buy one piece of bread for each day.
Lack of Variety
As mentioned above, there is no alternative good of a similar nature to any existing good, apart from those which are of a different quality. There is some price-quality trade off, but only at five different levels of quality. The only reason anyone should logically buy a certain Q of a good would be to stimulate the economy or help a party business etc. Consequently, there is a limited variety of selling points to any company which is incapable of reaching the lowest market value for a good in a particular time period. Furthermore, as bread and guns are the only thing a player without a company has any reason to buy, there is no other sector of the economy in which to invest their disposable income. This reflects a further limitation on effective demand. The lack of variety also contributes to the oversupply of a limited amount of goods mentioned above. This, however, is due to change with the new economic module.
Frequency of Combat participation
Participation in combat is always frequent in erepublik. Whether a country is at war or not, there will generally be fighting (as in Ireland). Consequently, there will always be demand for guns. Therefore, attempts to stimulate the economy through war (thereby increasing demand for weapons), while beneficial, are far too limited in scope. This is demonstrated by the failure of this program in the eUSA (It can be found in the president's newspaper)
Wellness:Gun Use Ratio
For an average player, even with maximum disposable income, the use of guns in a single day is limited. A sensible player at 100 wellness should fight no more than 5 times before healing, as this will maximise his income which can buy more guns. This equates to the use of 5 guns. The maximum number of times a player can fight at 100 wellness is 6 times (i.e. the use of 6 guns). If every player was able to afford this, they more than likely would. Whether it was training or an actual war would make very little difference. Consider again, the eUSA.
Wellness and Motivation
Clearly, motivation is not quite as fundamental to erepublik (especially among 2 clickers) as it is in real life. nevertheless, it plays a part. Players are motivated to work at optimum wellness to achieve optimum production, which will hopefully increase the amount of pay they receive from their employer. An employee receiving fixed pay, regardless of production will lose motivation to achieve optimum wellness each day and will likely fight more than is desirable. This was one of my key criticism's of lambda's fixed wage policy.
Foreign Markets
All things considered, the only surefire way to boost demand for domestic goods is to sell them below their market value in another nation. Unfortunately, this will generally be met with tariffs or embargoes, making it exceptionally difficult. It may also be detrimental to international relations, unless this country is capable of using your market for similar means which conversely reduces demand for a certain domestic good in your own market. The lack of variety means that there probably won't be much benefit from it in the current system. This is also due to change with the new economic module.
The New Economic Module
I'll give a brief overview here. You can still read the main article about it in erepublik. The new economic module will add a library and entertainment district to your elife. There will now be a certain level of demand to increase happiness and there will be more focused development of certain skills, which can be used to produce different commodities. Aspects of commodities will be combined so that it will be difficult to find two commodities alike, in the words of the admins. Consequently, there should be a niche for a certain good in a particular market at any particular moment. Rather than undercutting foreign markets and perceptively 'exploiting' them. One can find a space for a particular type of good which does not yet have a place in that market. This should avoid any negative implications for international relations.
Conclusion
This may not be entirely accurate. I'm still new after all, but this is my impression of the workings of the game economy as I understand it so far. Corrections welcome.
