RE:krono inflation

I always make a profit on selling Krono, just like the majority of time I make a profit on the stock market and the futures market, got to love capitalism and the reasons to speculate in EQ2 and the real world. Don't blame the speculators, the people who undercut pricing get exactly what they are after no matter if a speculator buys their krono at a lower price or a player does - a quick influx of plat, charge what the market will bear.

Speculators make platinum, because they nurture a system where more Krono can enter a market each month, while maintaining the same platinum price of a "non-speculator market".

Speculators are like a marketing company that handles global distribution, and have the tools at their disposal to turn a 5 million unit per month industry, into a 7 million unit per month industry. The increased amount of units in circulation, allows the marketing company speculators to make a profit, AND for the original business to make even more profit, while the actual unit price remains the same.

Unless you can somehow prove that the existence of Krono speculators, does not encourage more Original Krono Purchasers to buy (from the website) and sell (on the broker) Krono, you have nothing more than I, an opinion, and one that is not axiomatic.

I am not "blaming" speculators for raising prices; I am merely pointing out the fact that they do raise prices in my argument about their affect on SOE store sales. I myself buy Krono from SOE and sell them on brokers, so speculators have helped my bottomline tremendously. I did initially call them "parasites" because I thought that was the correct word to describe them, but
I hadn't factored in their contribution to people who want plat fast, and after that was explained to me, I stopped calling them parasites. It was just the wrong word.

When I first entered this thread, I wondered about the claims people were making about the Krono market. So, I did a little research (putting my Google University PhD to good use) and determined that, in the long run, because speculators raise average Krono price in-game, they must also reduce the average quantity sold in-game (as compared to a market without speculation), which must also reduce the quantity sold in the SOE store.

In order for this argument to be false, it must be shown that speculators aren't profiting by reselling Krono. However, proving that speculators aren't profiting from reselling Krono would be proving that they have spent a year reselling them and have broken even or lost plat. That idea is ridiculous.

That is false in every important sense of the word.

Speculators make profits by buying low and selling high. They resell commodities for profit, and that is an upward price pressure on the market. In a market without that pressure, prices are lower on average over time.

I would love to hear an explanation of how anyone can profit by "volume" sales where the profit on each transaction is zero! You reminded me of the old SNL commerical spoof First Citywide Change Bank.

http://screen.yahoo.com/first-citywide-change-bank-2-000000534.html


In fact, speculator's raising prices does the opposite of what you're saying, decreasing and not increasing the number of Krono sold in-game because it prices some buyers out of the market. That's basic Economics 101.

If speculators make profit by buying low and selling high, then they raise average prices over the long-term. If prices are raised, then some buyers leave the market. If there are fewer buyers in this speculative market, as compared to a non-speculative market, then there must also be lower sales in it's SOE store over the long-term.

I'm sorry, but that just isn't right. Take medical care - medical care is MORE expensive than it used to be, yet we use more of it. Stocks - there is higher volume now with higher prices than there was when a dollar stock meant it was too highly priced for the average person. Clearly - 'It's a higher price, so if you ignore ALL other things including inflation and elasticity, that means it sells less!' is simply an inaccurate belief.

Kronos are like gas - you may complain about the price, but you still buy it if you can afford it and you need it. You just spend more on a Krono and less on other things that are more discretionary like that shiny new chest piece.

You're making false analogies. The healthcare market is amazingly complex and heavily regulated. It's a basic fact of economics that, as price rises, demand falls. Every other market force you can mention affects both speculative and un-speculative markets, and the only strong market force that doesn't is speculation itself.

"The law of demand states that, if all other factors remain equal, the higher the price of a good, the less people will demand that good. In other words, the higher the price, the lower the quantity demanded. "

http://www.investopedia.com/university/economics/economics3.asp

You should just admit admit that you were initially wrong because you didn't have all of the facts.

Is there anyone who initially thought that higher Krono prices led to higher demand but now accepts basic Economics, Mathematics, and the Cartesian coordinate system? Just one person?

Logic note: The three concepts you listed (Economics, Mathematics and the Cartesian Coordinate System) are not linked in any meaningful way in the context of this thread of this thread.

To have a meaning discussion, we must share a common frame of reference. If you don't accept basic economic laws about supply and demand, or the Cartesian diagrams on which the data are plotted,, or basic mathematics with which conclusions calculated, then meaningful discussion on this topic is impossible.

sorry the common frame of this discussion is making a profit, both those that just purchase a single krono and those that purchase the krono that is priced below their's do it for one thing - profit. the people who get plat for their krono could care less that another player bought it to use or to re-sell, all they care about is that it is sold and they have more plat in their account then prior to it.

No, the actual frame of references are Economics, Math and the Cartesian coordinate system. The "topic" concerns profit, but that's not a frame of reference. Geeze, we don't even share a definition for the "frame of reference". I could quote an expert source, but nobody but me accepts those, so I may as well quote Dennis Hooper, man. 'You can't land on a fraction, man!' Groovy, man! Far out, man!

Oh want the heck. Meanwhile, back in the real world:

Frame of Reference

1. A structure of concepts, values, customs, views, etc., by means of which an individual or group perceives or evaluates data, communicates ideas, and regulates behavior.
2.Also called reference frame. Physics. a framework that is used for the observation and mathematical description of physical phenomena and the formulation of physical laws, usually consisting of an observer, a coordinate system, and a clock or clocks assigning times at positions with respect to the coordinate system.

http://dictionary.reference.com/browse/frame of reference

Why are we still arguing over economics? Thread has gone so off topic and needs locking. Its just become a contest of who can drivel on the most and sound like my economic lecturers. (P.S - I hope none of you are actually my lecturer.)

Can we agree that the higher people can sell their Kronos for the more people are likely to buy Kronos from SOE? (since they're paying the same for the Krono itself, and the goal is to get pp in return)

Can we agree that if buyers are not able to pay the price being asked then the price will drop and the whole 'Kronos are priced too high' problem solves itself? If prices stay high on an item that anybody can introduce into the game world then obviously people can afford the price, and there is no problem.

Or here's an example:
World A: No speculators: Seller A, B, and C want pp. The Krono price is 500pp - Seller A and B don't think that's worth $18 so they don't buy one. Seller C buys 1 Krono to sell for 500pp. Seller C puts his Krono on the broker. You have buyer A, B, and C go to the broker to get a Krono. Buyer A buys it immediately when he sees 500pp. Seller A, Seller B, Buyer B, and Buyer C walk away unhappy. The only one happy is Buyer A who got a Krono at a price much lower than the price the market would be able to handle.

World B: Resellers have driven the average price up to 1,000pp. Seller A is now willing to buy 1 Krono, Seller B is willing to buy 1, and Seller C is willing to now buy 5 because of the higher return on their $18. Buyer A, B, and C go to the broker to search for Kronos. Buyer A says 'Woah, 1,000pp. I'll wait.' Buyer B was going to buy 5 but because the price is now 1,000pp he only buys 3. Buyer C doesn't think 1,000pp is anything at all since he has a lot more pp than that, and buys all 4 that remain on the broker. Now SOE has made $126, 7 Kronos entered the game and were consumed. Seller A, B, C, buyer B, and buyer C ALL walked away happy having got what they wanted. The only person that is unhappy is Buyer A who runs to the forums to demand SOE do something to cause the price to go lower.

I used to go to the broker and see no Kronos for sale, or just 1 way up there at 2,000pp. Occasionally somebody would put one up for 600pp only to have it snapped up immediately leaving none on the broker again. Thanks to resellers though now I can go to the broker and get a Krono whenever I want. I pay a bit more, but they are always available for me to buy. That makes me as a buyer happy. The resellers are taking a risk that suddenly people won't pay their asking price and they might lose pp. In return for taking a chance at losing pp if their bet pays off they gain pp. I don't really see anything wrong with that.

Shadrac the point I think you are missing is that while there may be fewer buyers from the broker that is immaterial to Sony's bottom line. The OKP (Thank you for that Avirodar) are motivated to buy more because they can now feel comfortable asking for more, and as long as their price will still allow for profit speculators will buy up these Krono as well. Thus driving even more sales. While you may drive some people out who are plat poor AND cash poor those are not the people who affect Sony in any way. What the loss of those people MAY cause is a decreased number of players, but (and I am not judging here merely making an observation) players who in no way contribute to the financial well being of SoE.

The loss of those players may eventually cause a decrease in the resale Krono market, but I tend to doubt it. Here is why. Just playing the game will generate more cash than you need even on a FTP account.

Now if those players are unwilling to play FTP then one must perforce ask why, and while they may be wonderful people with many redeeming qualities friends, family, and talents these are the parasites who want the gold membership and nothing less, but are unwilling to exert the very minimal effort it takes to generate the plat necessary to afford this. I spent one day off running a pair of repeatable faction quests ( about 4 hours and mentored to 70) and walked away with almost 400 plat (quest rewards and vendor trash). No need for any special gear or anything no raiding just using one of the many plat faucets available. I am not one of these been playing since launch vets (at least not this game I began on EQ1 so perhaps more drive than the current crop of completely new to MMOs ADD generation) so I do not know all the tricks and places they do so believe me when I say it can be done bronze or silver , point of fact I did it later on an alt at level in nothing more than MC gear (harvested and made myself) so the fact I have a paid sub has no bearing on my ability to earn the in game cash. People too unmotivated to spend three hours a week (about what I figure it would take to earn the plat) are also too unmotivated to learn their class and therefore no loss to the community as a whole either. If they do not know where to go to earn the money then look it up, its how I found the places I go when I need cash in game. Because all these vets who have all these "secrets" took the time to create sites that tell you everything you need to know, you just have to look for it.

The matter was settled in the post that included market diagrams. Since then everyone else has just been listing market forces that apply equally to both distorted and undistorted markets, while ignoring that fact.

I don't understand the mindset that shuns discoveries. We didn't uncover my truth. We uncovered the truth. I didn't win. Everyone who accepted the truth won. It's not shameful to make a false argument then change one's mind in the face of new evidence (I did that in this thread). It's shameful to make a false argument and then keep it after it has been revealed to be false, or to not even recognize why ts false when shown.

Stop playing EQ2 so much and study!

Please don't lock the thread. This is Ben Bernanke. Me and Alan Greenspan always wondered where we were going wrong and are reading this thread for pointers. You know in order to manipulate the market that somebody has to be hording Krono? If the amount of Krono character's are holding was public knowledge and nobody was found to owning more that say 12, then this whole discussion would be pointless.

I remember in the early days of EQ2 that you could see what characters were the wealthiest on all the servers. I recall seeing that my guild leader was ranked 5th at one time. No amounts of currency were listed, but the top 10 of many different things was available to see. Top 10 Krono owners would be nice to see.

Disagreed. At least not over a long period of time because the only Krono sink (people who use/destroy them) is smaller in the distorted market. The SOE store associated with the distorted in-game market will see higher sales spurts, yes, but those are matched by equally low sales droughts. In the long run, the spurts eat future sales, then sales crash until the lower number of users in that market are "hungry" again! There cannot be more sustained sales over a long period of time compared to the un-distorted market because there are fewer users downstream in the distorted market.

When you average the sales reciepts of the distorted market in the SOE store, the valleys will level the mountains, and the total remaining sales will be lower than the total sales in the SOE store associate with the un-distorted market, over time.

Disagreed.

You had me at the beginning, then you added "solves itself" at the end. Prices fluxuate in both distorted and un-distorted markets. The important difference is that total demand in the un-distorted market will be higher.

Since the average monthly price in the distorted market will always be higher on the demand line than the average monthly price in the un-distorted market over time, and since the demand line is always tilted to the left, the distorted market will always have lower demand than the un-distorted market, and over time that will translate into lower sales in whatever market feeds it.

Define a distorted market, define an undistorted market, and then try to convince anyone that what you view as an undistorted market is actually undistorted? Because those people you're going to point to as being speculators, why do you think prices vary from store to store, week to week. There are constant changes in demand.

Supply and demand by itself will create distortion, because by nature it fluctuates and that fluctuation is never and will never be perfect. The "evil" of speculation affects all supply and demand by nature, it's never untouched. You don't think store A orders X more of an item because they know they will sell it, they're "Speculating" on what they think the demand will be and trying to acquire enough items to meet said demand, and then they set their prices accordingly.

The only perfect supply and demand situation you're going to get is if SOE were to fix the plat cost of krono's, which will NEVER happen, to do so would see SOE actually create an officially supported USD to plat conversion rate. Allowing the players to define the conversion by what player A values their SC card or Krono limits people from attempting to pin liability on SOE because their plat got stolen. (Face it, assuming you live in the US, you know people will create a lawsuit over anything),

You seem to assume that someone that doesn't use a Krono this month won't be here next month to use a Krono - or three months, or a year down the road. Depending upon the given person, that may or may not be true, so it is not automatically assumed to be the case. Any calculation that begins with the future absence of that player as a base assumption is, therefore, suspect. (If you had some sort of empirical data* showing the percentage of players that quit after dropping from gold to silver account status, however, that would be different. But you haven't shown us anything of the sort, so far.)

If a gold subscriber doesn't subscribe the next month, that member merely drops to a silver membership. He or she isn't banished from Norrath.

* Preferably from a peer-reviewed source. Or directly from SOE.