Sep 23rd 2012, 1:26:20
It's the amount ppl undercut by at a time that I'm referring to.
There are a few other factors that make EE an imperfect market example and thus economic theories aren't perfect.
1. Many n00bs in game who aren't trying to maximize profits
If the price is at $250 why would someone sell at $90? Why not sell at $249? And then $248? etc. until you reach an equilibrium? In the real world that's what happens because corporations are trying to maximize profits. In EE there are just too many idiots who are just trying to sell their crap so they'll sell at whatever price they want, even at a 50%+ discount.
2. The 6-8 hour transit time to sell vs. real-time bid system.
Sellers who want to sell their oil right away will sell at the current bid price hoping the bid is still there when their goods reach market. On the flip side, because bidders have to wait at least 6-8 hours to have their orders filled most don't use it but rather they'll buy at the market price. So the bid price isn't an accurate representation of what ppl are actually willing to pay. So even if demand pushes equilibrium price up, someone with a lot of supply who always sells at current bid price will just keep pushing the price back down because their supply is more than the bid qty (since so few ppl use it) and thus the market price is lowered, and each subsequent person then sells at a lower price of that big block. If both were real time and all buyers use the bid system then yes, real world economics would make sense (see stock market) and the bid vs ask price would differ by a few dollars, that's when you'd get a true equilibrium. The 6-8 hour goods to market time also means ppl aren't selling at the optimum price. Because sellers don't know what prices will be in 6-8 hours they'll undercut by more than $1 at a time, hoping they are the lowest price when their goods reach market - thus an imperfect market (though it still doesn't make sense to undercut by 50%+).
3. And most importantly: No price floor + n00bs who don't know how to calculate a competitive price per barrel to other strats to figure out the floor.
With no private market to buy or sell oil there is no obvious price floor, so n00bs just sell at whatever price they want. I did the calculation a few resets ago, from what I recall a fascist with equal amount built in farms and rigs and no agri tech would make the same amount of $ if they sold oil at about 3x food price. And because most farmers have tech, oil prices should theoretically have a floor at a minimum of 3x food price for it to be a competitive strat. If all oilers knew this, then the price of oil should start at the floor price every round - and if every oiler was aiming to maximize NW the no the price wouldn't go down because ppl are still going to make the same LG if oil price is $70 or $150, aka demand is essentially constant round to round depending on when in the reset you are at (assuming same # of players).
There are a few other factors that make EE an imperfect market example and thus economic theories aren't perfect.
1. Many n00bs in game who aren't trying to maximize profits
If the price is at $250 why would someone sell at $90? Why not sell at $249? And then $248? etc. until you reach an equilibrium? In the real world that's what happens because corporations are trying to maximize profits. In EE there are just too many idiots who are just trying to sell their crap so they'll sell at whatever price they want, even at a 50%+ discount.
2. The 6-8 hour transit time to sell vs. real-time bid system.
Sellers who want to sell their oil right away will sell at the current bid price hoping the bid is still there when their goods reach market. On the flip side, because bidders have to wait at least 6-8 hours to have their orders filled most don't use it but rather they'll buy at the market price. So the bid price isn't an accurate representation of what ppl are actually willing to pay. So even if demand pushes equilibrium price up, someone with a lot of supply who always sells at current bid price will just keep pushing the price back down because their supply is more than the bid qty (since so few ppl use it) and thus the market price is lowered, and each subsequent person then sells at a lower price of that big block. If both were real time and all buyers use the bid system then yes, real world economics would make sense (see stock market) and the bid vs ask price would differ by a few dollars, that's when you'd get a true equilibrium. The 6-8 hour goods to market time also means ppl aren't selling at the optimum price. Because sellers don't know what prices will be in 6-8 hours they'll undercut by more than $1 at a time, hoping they are the lowest price when their goods reach market - thus an imperfect market (though it still doesn't make sense to undercut by 50%+).
3. And most importantly: No price floor + n00bs who don't know how to calculate a competitive price per barrel to other strats to figure out the floor.
With no private market to buy or sell oil there is no obvious price floor, so n00bs just sell at whatever price they want. I did the calculation a few resets ago, from what I recall a fascist with equal amount built in farms and rigs and no agri tech would make the same amount of $ if they sold oil at about 3x food price. And because most farmers have tech, oil prices should theoretically have a floor at a minimum of 3x food price for it to be a competitive strat. If all oilers knew this, then the price of oil should start at the floor price every round - and if every oiler was aiming to maximize NW the no the price wouldn't go down because ppl are still going to make the same LG if oil price is $70 or $150, aka demand is essentially constant round to round depending on when in the reset you are at (assuming same # of players).
Originally posted by Xinhuan:
Are you guys stupid or what?