RE:krono inflation

As I am using the term, a market where players are allowed to resell Krono as many times as they like. Call it "reseller distortion," if you like.

As I am using the term, a market where players are not allowed to resell Krono beyond the first trade.

As I used the term "un-distorted," I don't need to prove that it's free of reseller distortion because it's so by definition.

Everyone knows that.

That distortion applies equally to both markets distorted by resellers and those not, which is why I explained at length that I would ignore those forces. They have no affect on my conclusion.

That is not true for all game items. For example, items purchased from the SOE store are markeed "HEIRLOOM," and cannot be traded. And if Krono were marked HEIRLOOM on first purchase from brokers, there would be no reseller market for them, as well.

Interesting opinion.

No such assumption was stated or implied, and the only way anyone could find such an assmption in my words would be if they wanted to for the sake of argument. I have stated many times that I am aware that people horde things for various reasons, but there are hoarders in both the distorted and un-distorted markets, and so this does not affect my conclusion.

What makes you think that the higher prices in the distorted market would attract more hoarding demand? The few people I know who hoard things in RL wait for buying opportunities. When the prices double, I've never heard anyone say "Man, I gotta get me some o' them high prices!"

Instead of fixating on factors that affect both markets equally, why don't you consider the one factor that weighs heavily and inversely on the two markets? Any market with more demand will consume more of a product than a market with less demand. In other words, "more is more than less".

Really? Then what did you mean by this sentence?

That seems to imply that there will be less users at some point in time (after their subscriptions run out) when they cannot purchase cheap Krono, which is not necessarily the case. There may be less gold subscribers due to Krono, in the lag period between the increase in price due to speculation and the influx of OKP supply, but once that increased supply occurs, the speculators only have a few options:

1. Spend massive amounts of plat in order to maintain their monopoly (which is a losing proposition, since it merely motivates yet another wave of OKP supply);
2. Stockpile a certain amount, while letting market forces do what they may, and placing the stockpiled Krono on the broker only when the overall supply on the broker is low (thus increasing the likelihood that someone will be desperate enough to purchase it for a very dear price);
3. Stockpile a certain amount, set a bottom limit to the price they are willing to accept for the Krono (so as not to sell at a loss), then place them on the broker in varying quantities at different price points;
4. Stop speculating and hope they can find someone that will give them a decent price for their stock.

Those are about it. (There may be a few options that I haven't thought of, but I'm not a speculator, so an actual speculator may be able to add to the list.)
Option 1 is a road to ruin. Although there are people in the game with a lot of plat, nobody has an inexhaustible supply of it. Option 2 results in a lower price with the influx of the OKP supply; in turn, this results in more Krono end-users that can purchase them. Option 3 has almost an identical result to option 2, except that the speculator receives a quicker return on his or her investment. Option 4 is actually the option with the least likelihood of an end-user (aside from the speculator) making use of the Krono.
The point is that, barring a massive exodus from the game, the Prospective Krono User (PKU) will still be present in the long term, which will allow sustained sales by either the OKP or speculators throughout.

I wasn't even referring to any hoarding effects. I was referring to those that decide, on a monthly basis, whether or not to purchase a Krono (from the broker) for the next 30 days. A decision to wait is not irrevocable. If someone doesn't buy one today, or next week, or next month, nothing stops them from becoming a purchaser (from the broker) two months, three months, or even a year down the road (when the price drops to a point that they find reasonable). So those users can't be considered permanently out of the buyers position in the market. It is only temporary.

By your refusal to consider the supply aspect (which would not be equal in the two systems), you are drawing a conclusion from a faulty premise. With speculators, there is a greater supply of Krono within the game at any given time, due to the presence of OKPs (in the hands of speculators, on the broker, or in the hands of PKUs). Without speculators, there are fewer OKP and no speculators, which results in a smaller amount of Krono within the game at any given time. This, in turn, results in lower usage in game. Since there are fewer OKP. SOE makes less from the sale of Krono than they would with a larger number of OKP. And since there are less Krono on the broker, the low hanging fruit (i.e. the reasonably priced ones), will be bought quickly leaving the higher priced ones that aren't getting replaced.

Is that the best outcome for SOE? What do you think?

Who said the profit on each transaction is 0? I never did. That misguided assumption is likely a cause of your inability to comprehend the points I am making.

The bolded section above is a critical flaw in your logic.

Every time that a speculator purchases a Krono off the broker, that was listed by an OKP, exactly that happens. A Krono is sold in-game. This gives the OKP exactly what they wanted, a fast sale at a desirable figure. This encourages more OKP activity (when compared to slow sales), thus increasing Krono sales via SOE's website.

- If I am an OKP (15 units), but after 2 weeks I still have 10 that did not sell, why would I buy more?
- If I am an OKP (15 units), and after 1 day I have sold the lot, buying more Krono sounds tempting!

The only applicable scenario to claim that a small pool of potential buyers will cause a reduction in Krono sales from SOE's website, is if OKP's are unable to move their original product at a price they deem fit, thus discouraging them from purchasing more Krono from SOE's website. Quite clearly, this is not happening.

The pool of in-game buyers was only ever intended to be the rich, because they have the plat to give to the OKP's, and the OKP's have the $$$ to give to SOE. Random scrub #11642, that can only scrape to gether 300p, does not offer the OKP a lot of plat, thus in turn the OKP will not offer SOE a lot of $$$.

The diagram that you posted earlier, does not prove your theory. It was nothing more than a diagram drawn with the intention of reflecting your assumption, rather than a diagram based on facts that are relevant to the sale of Krono in EQ2. While not directly relevant to the paragraph quoted above, it is relevant to the overall presentation of your argument.

the only economics I worry about are real world, becoming obsessed with fantasy economics in a situation that does not exist anyplace but in the pixel and bit world is scary. Quote whom ever you want, it is all virtual and does not exist in the real world

You must not hang around the same people then. I know people who in 2008-2009 refused to buy various stocks because they had just gone down 50%, then after the run of 2011-2012 when the price doubled SUDDENLY they wanted in and bought some. Then when things took a dip did they sell or buy more? You take a guess. Human psychology is not as simply as 'Prices went up, don't buy. Prices went down, buy!' You may THINK people would buy when the price is lower, but people just don't work that way.

This will probably make me sound like a jerk, but I really don't mean this in any negative way.

"Virtual" goods are becoming more and more standard in the "real" economy. I can buy an entire library of books, music and video that all exist in digital format. There's no difference between me spending $18 for a Krono or me spending $18 to download an album from iTunes. Entertainment is entertainment, and somebody is profiting from it.

I said: "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"

By "users," I meant players who use/consume Krono. They are the primary market demand for Krono and the only sink (resellers are merely a secondary market). And I didn't just pull that assumption out of the air, that's a restatement of the Economic Law of Demand.

That doesn't matter. The distorted market will alway have less primary demand.

I do consider supply. Higher prices in the distorted market does gin up absolute in-game supply numbers, but that excess supply doesn't get used at a faster rate just because it exists, and those numbers don't just keep rising. That excess supply is a bubble, and it causes the distorted SOE store market to go thru boom-bust sales cycles. Over time the sales busts level out the sales booms, and the end result is that total sales figures are lower in the distorted market than in the non-distorted market.

Let's quantify this. Let's say the demand in the non-distorted market is twice the demand in the distorted market. So, un-distorted demand is 2D, while distorted demand is just D. Demand being defined as the actualy primary demand which players who use/consume.

And let's say the distorted market has on average one hundred times the "instantaneous" on-hand supply at any given time. So, distorted supply is 100S, while un-distorted supply is just S.

Now let's run those variables in a simulator for 1,000 years. When the simulation ends, the demand variables will be massive, while the "instantaneous" on-hand supply variables will be tiny in comparison. Since the non-distorted demand variable is twice as massive as the distorted demand variable, and since both supply variables are tiny in comparison, the non-distorted market must have pulled roughly twice as many Krono from the SOE store over the thousand years.

I can already hear the protests that "The demand disparity is too large. Distorted demand is only down by a third/quarter/fifth/tenth/etc.," but like the demand dots on the in-game diagrams I drew, the actual numbers don't matter because the market with the dot that represents the lower demand always loses in the long run as the sum of both demand variables outpace both rather static supply variables.

Your 'definitions' of distorted and undistorted are pretty near the precise opposite of what economists mean by those terms.

If you are going to advocate substituting your thoughts in place of...practically the entirety of established economic thought and rigor, you have approximately 19,340,567,813 books worth of explanation to catch up on for why yours is better.

Adding an administrative rule that says 'no no, you cannot make a transaction that a seller and buyer otherwise would choose" is kinda the definition of distortion. 1) it alters every application of economic theory, 2) it makes the market more inefficient, and 3) people will seek to circumvent your rule in any way they can. It will not do what you intend.

I take it back. I do know one guy who always buys high and sells low. He has an uncanny knack for picking the losing hand.

But generally speaking, human nature is to try to buy low and sell high, so your argument holds no water. The vast majority of players don't stock up on Krono after they see prices double. They wait for "buying opportunities".

Here we go...

Yes, I was aware of that phrase, but many words have different connotations in different contexts, and most people are able to handle that. If I were presenting a paper, I would have found a different word to avoid confusion.

Now if you had relevant points to make about my ideas, then I suppose you would have made them instead of resorting to constructing straw men.

Incidentially, I like the word "distortion" here. It's a perfect description of what resellers are doing to the Krono price.

/sigh.

I suppose you're going to tell me that just because OED online just changed the definition of 'literally' to literally what 'figuratively' means, that that's just fine.

No.

Words mean what they mean. Even if a majority of people are mistaken about what they mean, that doesnt make them correct. See: Decimate, Peremptory, etc etc. (and straw man- because that has a definition too and its not what I did; you need to look that up as well)

Calling something its opposite is ridiculous. As in by the definition of that word. Worthy of nothing but ridicule.

And if you'd have read past the paragraph you quoted, I did talk about your ideas. I summarily said that you dont have a clue what would happen, because even if you subtract the fact that you said wet was dry, you still said that water flows up. I'm just not bothering to explain in detail because you've already chosen to ignore everyone in your life who has tried to teach you this stuff. I don't have the time or the means on a message board to make up for all of those failures.

You're trying to talk about stuff in the 300 level. You need to go back to the 100 level before explaining it to you will take.

Me: "1. Do speculators raise the price of Krono in the game?"
You: "I would say no."

Resellers are either making profit (by raising average prices), breaking even, or losing money. Since you suggested that they weren't making a profit, I chose breaking even from the last two available choice.

It's impossible for resellers to resell Krono for higher prices than they bought them for without raising average Krono prices, unless there are some idiots out there who offset the reseller's profit by reselling Krono at a loss.

And it's impossible for resellers to resale things at the same or lower price and still make a profit by doing greater volume, which is what you suggested!

I asked you that simple question for a reason. We both know for a fact that resellers are driving up the average price of Krono, and if that is so, then demand is lower than it otherwise would be, and if that is so, then SOE store sales must be lower in the long term.

Since you refuse the accept the Law of Demand, we have no common framework to discuss what forces price up and down. Your arugment is with modern Economics and not me.

The diagrams adhere to basic economic principles, which is why, I suppose, you don't understand them.

Tell that to Sony. LOL

This is simple.

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

I have to ask Shadrac are you an economist by training or is your line of reasoning predicated on knowledge gleaned from a crash course at Google Community College (I refuse to call it a university)? Because Elostirion's background IS in economics and as such if you are not on a roughly equal footing then a 3000 word post with diagrams by you carries less weight than him replying, "Nope your wrong."

This entire thread is dumb. Somebody... won't say names, is assuming that ONLY the speculators can buy at a low price. He complains that speculators resell at higher prices and screws everyone over.. Why don't you buy at the price the speculators are buying at? I've bought several Krono off the broker and never paid more than 500p.

also ITT.. people who think they are economic geniuses, the same kind that are killing RL economy.

not all of the Krono, only the ones THEY buy.. I still buy mine for the same prices THEY buy them at.

I only studied economics for a single year.

However, if Elostirion is claiming to be an expert, that doesn't necessarily mean that his statements are correct. He still has to back up his "You're wrong" statement, and I would appreciate him answering my questions so that I can learn that I am wrong or else that he's on some fringe.

If Elostirion rejects the Law of Demand, then he cannot be considered correct either because we would then have no frame of reference to discuss the subject. In that case, we cannot refute what I said because he doesn't accept the foundational science inside which I argue. In that case, the argument is more fundamental than anything I wrote.

Let me explain. I put a Krono on the market this morning at 1kp. There were over 125 Krono on the market when I put it there.

My Krono disappeared in a few seconds and it was purchased by an account named "Ying" which isn't among the sellers.

Can you spot the flaw in YOUR logic, or do I have to spell it out?