RE:krono inflation

Au contraire! I have just uploaded two demand diagrams and am about to explain them in a new post.

Prepare for thy DOOM! DOOM! HAHAHAHA!

So, you're trying to compare...

1) Value of "The Crown Jewels" - A limited, exclusive asset of national iconic status, and significant sentimental/nostalgic value.

Versus...

2) Value of "Krono" - A video game RMT item, freely available, non-exclusive asset, available in 25 units per person, per day, with no sentimental or nostalgic value.

Wow.. just... wow... Not even in the same solar system.

If someone wants to subscribe, they do just that, subscribe. Most Krono sales are from people who want to gift them, or sell them in-game.

This means the original Krono sellers gain nothing by having Krono listed on the broker for extended periods of time, at prices people can not afford. In order to sell a Krono for plat, the listed price needs to be affordable. Thus, if the sources of plat become scarce, the listed price of Krono will go down. If it is easy to generate volumes of plat, the listed price of Krono will go up.

The value of royal artifacts (against the host nations total currency supply), is not a legitimate comparison tool to use in relation to in-game pricing of Krono in EQ2. If you see it otherwise, then ... all power to you...

Ugh.

HA! I remember the PR nerf thread quite well, and I too am right there with you with the when reading what Dulcenia said.

This is basically what the 15 pages of this thread boil down to.

If we have enough buyers willing to purchase at a price of 1k per Krono to sustain that price, then what makes people think they are automatically entitled to a Krono for half of that price?

There is no shortage of krono buyers, but a shortage of krono sellers.

The price of Kronos will always go up.

Why?

Because demand for free gold subscription will always be there.

Because more plat is coming into the economy than is leaving it (ie the value of plat will lower)

Because the supply of krono will drop over time as the number of players drop (natural game progression)

The end. Enjoy debating.

INTRODUCTION
There are two Krono markets, one in the SOE store and the other in the game. In this post, I will attempt to explain how speculators drive off Krono customers from the in-game market and how that is always eventually reflected in the out-of-game market as lessened sales. I ignore many factors in this analysis because they affect both distorted and un-distorted markets, in-game and out-of-game markets, and different games equally, and so have no bearing on my conclusion.

This analysis only addresses the question of maximizing Krono sales in the SOE store market.

Here are two demand diagrams that represent the two markets. The diagram on the left represents the SOE store Krono market, and the diagram on the right represents the in-game broker Krono market. The vertical axes represent the price of Krono in Dollars (P1) and in game platinum (P2), and the horizontal lines represent the quantity sold in the SOE store (Q1) and on the in-game brokers (Q2).

　
　
　

IN-GAME BROKER DEMAND DIAGRAM
The price of Krono in the game is represented by two dots along the demand line. The average distorted price dot (A) is 1,100pp, while the average un-distorted price dot (B) is 700pp. These two prices are arbitrary and merely represent the fact that the average distorted price is always higher than the average un-distorted price. I know that some people will choke on the word "always," but this analysis takes a long-term view of the market. After all, the reason for the distortion is speculation, and if speculators can't profit, they will abandon Krono speculation.

The distorted price (A) will vary between 1,000-1,200pp in this example driven by the various market factors, just as the un-distorted price (B) will vary between 600-800pp due to the same factors. The important thing to understand is that both markets fluxuate around different loci or "attractors" on the demand line, but A is always above B in the long-term.

The shaded areas represent the total average monthly profits in each market; the actual areas are invalid because the scale is off, but that's not important because in-game profits do not affect my conclusion. The important thing to understand is that the distance between A and B on the line Q2 represents the number of players lost due to market distortion. These are players who would have purchased Krono in the lower 600-800pp un-distorted price range but who will not, for various reasons, in the higher 1,000-1,200pp distorted price range.

These lost buyers are important for reason that will become clear on the SOE store demand diagram.
　
　
OUT-OF-GAME SOE STORE DEMAND DIAGRAM
For this analysis, the price of Krono in the SOE store is always $18. Discounts for bulk purchases are assumed to affect both distorted and un-distorted markets equally, and so have no affect on my conclusion.

The two dots on the SOE store demand line represent the average quantity of Krono SOE sells each month in the distorted market (A) and the un-distorted market (B). These dots will temporarily slide left and right along the line due to varying market forces. For example, if in-game Krono prices seem really high, additional sellers will temporarily be attracted to purchase Krono from SOE, shifting dots to the right. If in-game Krono prices seem really low (due to a glut), those lower prices will repel new sellers, and current sellers will not need to refresh their Krono stock until they sell the old stock, shifting dots to the left.

Of course, low in-game prices attract more in-game buyers, so this always corrects itself eventually in both distorted and un-distorted in-game markets.

The quantity of the un-distorted market dot (B) is greater than that of the distorted market dot (A) because with a lower average monthly Krono cost in the related un-distorted in-game market, more Krono will be consumed in the long-term in that market than in the distorted in-game market. In the long-term, if more Krono are consumed in the un-distorted in-game market, then more Krono must be sold in the related un-distorted out-of-game SOE market. QED.

The line-shaded area in the diagram represents the total monthly profit in the distorted SOE store market.The dot-shaded area represents the additional monthly profit collected in the un-distorted SOE store market due to capturing the buyers between A and B in the related in-game market diagram which are lost in the distorted market.

An obvious protest to all of this is the fact that more in-game consumption translates to higher demand which translates to higher prices which translates to lower demand which also crosses over to the SOE store market. However, that is true for BOTH markets. The big difference between the in-game markets is the fact that the attrator on the demand line in the distorted market (A) is always above the attractor on the demand line in the un-distorted market (B). Therefore, the number of consumers in the distorted market (A) is always to the left of the un-distortet market (B) on the quantity line (Q2), in the long-term.

Another obvious protest is the fact that some players tend to horde things for various reasons. However, this analysis examines the long-term, and unless Bill Gates decides to start hording Krono, the horders can only absorb so much Krono. Horders will not continue to absorb all excess Krono in the market indefinitely.

Another obvious protest is "Market Force X" which I didn't mention. We could all write a long list of market forces that would temporarily move the dots right or left, but those movements would be the same for (A) and (B), except for the market force of speculation. After all, that force is the reason we have two attractors on the line (A) and (B) and not one.
　
CONCLUSION
Because the in-game broker price of Krono distorted by speculation (A) is always higher on the demand line than the un-distorted price (B) over the long-term, and because the demand line is always tilted to the left, B-A fewer consumers (on line Q2) will be attracted to consume Krono in the distorted in-game market. And because all Krono originate in the out-of-game SOE store, that will translate into few sales over the long-term.

Make the Krono able to cash in for 1800 SC.

I should have bid on a whiteboard at the liquidation sale. All I actually came home with was some oscilliscopes, soldering irons and a lab bench.

A whitboard is an essential tinkering tool. Everyone needs at least one!

LOL somehow this is a serious analysis of the krono market and you start off assuming speculators distort the krono market. I am sorry you spent so much energy writing such a disciplined document upon a foundation of sand. The unporven assumption is used as one of the cornerstones for the generated wall of text.

May I suggest you first prove the krono market is distorted before you use the asseration as a statement of fact? I for one firmly believe there is no distortion due to speculation and see these market fluxuations as expected using two out of the three common economic shcools of thought.

Okay, let's take this one point at a time.

Taking a long-term view:

1. Do speculators raise the price of Krono in the game?

I would say no. But one would need to read through all the points to understand why I feel that way, even if they do not agree.


Speculators help to provide fast sales for the original purchaser (real $$$) of Krono.
- This adds incentive for someone who wants plat, to pay cash for Krono's on SOE's website.

Speculators help provide an "increased" plat value of Krono that the original purchaser can sell for
- This adds incentive for someone who wants plat, to pay cash for Krono's on SOE's website.
- This helps support a higher volume of original Krono purchasers, without degrading the in-game value of Krono.

If it was not for the increased incentive provided by speculators, I would argue that less people would be buying Krono from SOE's website, to sell in-game (because the reward would not be as high)..

So if less people are buying Krono from SOE to sell in-game, the price of Krono will go up (due to demand). So we end up in a very similar position.

I was hoping to get Skwor to support his claims. Hopefully, he will come back, but in the mean time...

You don't think speculators raise the price of the Krono. Do you think they resell Krono as a free service, putting them on the market at the same price they purchase them for?

Well, really its just some savy people making plat with plat. Selling krono at x price across all servers since the kronos are account based. So they sell a bit on server on a fresh toon to generate some plat. They then drive the price of kronos down by flooding it and forcing competition to lower prices. When the price hits a point where the number of kronos at a certain price will generate the % profit they want to make if bought and resold, they do it. and trust me they have the in game revanue to due it on a level that isnt being competed with by new kronos being purchased for money to sell for plat, for multiple reasons. Im not as well spoken as my pal avi is, but market manuipulation is really easy when you can freely move product from one market to a next to influence supply and demand where you want on whatever level you want without having any cost for mainaining the product, while limiting the product to the selected market that has a currency value they want. If you want to fix that just tag a krono to not be "cross server" after its been sold 1 time, it would have some unintended consequences but it would fix the crying about inflation. If the price is up and you NEEED a krono i suggest you learn fast ways to generate plat, like, oh 90 min resetable heroic zones that you can solo in 4 minutes for 2 - 6 fabled items plus masters and legy stuff, mute it, and put it on the broker.

That is like having one hand pay the other. There would be no profit for SOE, no profit = no game.

Wait, what? How's there no profit? Someone's still gotta pay the $18 to make the initial Krono purchase.

Only thing I think is that it should be 1500sc, not 1800. 1 Krono should be equal to 1 SC card.

No, and no.

As mentioned in my prior post, I believe speculators encourage a greater supply of Krono, while mitigating the plat price degradation of Krono due to an enhanced supply. Both the Original Krono Purchaser (I will refer to as OKP), and the speculators, both have one thing in common. They want plat. They just go about it in different ways.

The OKP's typically want a fast turn-around, as long as they perceive the plat they will get to be worth the $18 per unit investment. If it takes too long for an OKP to sell their Krono, or the plat-value of Krono was low, the incentive for someone to be an OKP would be reduced.

The Speculators rely on intuition and prediction, dancing with the supply and demand of a product. If supply outweighed demand, speculators would lose plat. This inevitably means one thing: The demand exists for Krono at the prices being listed by speculators.

So because of speculators, the incentive for OKP's to purchase more product from SOE's website, is increased. This results in more sales from SOE's website, while in-game demand is clearly strong enough for speculators to profit. And as stated in my prior post, if the speculator market was suddenly erased, a series of events would unfold, in the following order:

1) Krono prices on the broker would drop in price.
2) Because of #1, there would be less incentive for OKP's to purchase more stock from SOE's website.
3) Because of #2, supply would drop well below demand, making Krono's go back up in price.
4) Because of #3, we end up in a similar position to where we started.

Either way, it will always come down to supply and demand. Speculators do not make profit unless they have a good grasp of supply and demand. The supply and demand to support speculators, will still exist even without speculators, meaning that the prices listed by OKP's will still be in the same ballpark if speculators were suddenly removed from the equation.

Keep in mind... When a mount goes up for sale in auction, or when a piece of raid loot is opened to plat bids for alts, the total the item goes for, has nothing to do with the going rate of Krono. So from an OKP's perspective, the higher the going rate of Krono, the more incentive they have to be an OKP of several Krono's, because they will get more for it.

If anything, I view speculators as a marketing team, allowing for an increased supply and distribution of a product, at a profitable rate for all involved, and still at a price the market is happy to pay (speculators would not profit if this was not true, even if some randoms complain about their IRL & in-game hardships).

It is always worth remembering, the target audience for purchasing Krono off the Broker, is not people doing it tough IRL. It is not people doing it tough in-game. It is people who are loaded up with a healthy amount of disposable plat, and are willing to trade that plat to someone who gave SOE $18 for a 1 month subscription token.

If the intention was for Krono's to go to the needy (which it was not), instead of the rich, a whole different system would have been required.

Speculator's motive is profit, and their method is driving prices up. If they cannot make profits, they leave the market, and prices fall back to pre-speculative levels.

It's axiomatic that a market with speculation (in the long-term) must have higher average prices that a market without speculation.