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What drives the economy


Khevar's Avatar


Khevar
04.21.2014 , 05:32 PM | #1
This just a fluff opinion piece, no real significance other than I happened to be thinking about it.

Disclaimer: I do not even remotely consider myself an economic expert.

Having spent a lot of time crafting over the last couple of years, and having dabbled in playing the market (e.g. buying and relisting), crafting lowbie gear, crafting endgame gear, etc. I've had a certain amount of experience making and losing credits. I've also seen (and participated in) debates on these forums about how the economy is affected by the Cartel Market, by crafters cornering commodities, inflation, etc.

I have a theory.

I believe that the market is driven by how many credits per hour someone can make doing dailies at level 55.

The only way to "create" credits is to loot a chest, loot a mob, turn in a quest or sell equipment to a vendor. Buying and selling on the GTN only move money around, it doesn't get created.

If someone sells an expensive item (e.g. Revan's mask), it is purchased by someone who amassed credits. This player obtained those credits either by running dailies, or by selling things to people who did.

Lowbie purple gear can sell for 150,000 credits, which is an extraordinary price, when you consider that crafted Basic gear (rating 156) sells for much less. The only reason it sells for that much is because people are willing to pay for it. And the only people willing to pay for it, are players that already have level 55s, who have a much higher ability to generate revenue.

Anyway. That's my theory. What do y'all think?

Duskrequim's Avatar


Duskrequim
04.21.2014 , 07:11 PM | #2
Yes thats basically what drives the market. Players that are max level run dailies and craft etc.. and make alot of credits. They then unload these credits into the market to generate the pricing increases on items. (twinking) low level characters keeps price high for certain items while high end gear drops because how many pieces drop. Items that are the strongest (orange, Purple) are high value.

The only way to combat this would be to create what is know as a Credit Sink in the game. This would be something that would entice players to spend their credits to do or get something. For instance change the cost to change appearance/race to credits instead of CC and you would create a sink. Or allow players to trade in so many credits for Comms or for a casino that drops rare items like maybe Cartel items. This would benefit the game in removing the credits that exist and deflate the prices of items and gear.

Vandicus's Avatar


Vandicus
04.21.2014 , 07:22 PM | #3
Its something along those lines.

At first credits have to be generated. However, a lot of earnings for wealthy players is exchange of previously earned credits.

Say you've got 100,000 credits from running dailies, and you buy an item off the GTN. Well 6% is shaved off. So transactions ad nauseam, or a simple formula(100,000/.06), approximately 1.66 million credits worth of transactions are made with the initial 100,000 credits before its effect disappears.

Now this assumes the credits aren't simply held, but are spent, but the main point is to illustrate how earnings through GTN transactions result in high prices.
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Andryah's Avatar


Andryah
04.21.2014 , 07:43 PM | #4
You are focusing on liquidity and wealth as the economic drivers inside the game.

While that is indeed the "fuel" for the GTN....... it completely ignores all other factors that have +/- impacts on the fluidity of the economy.

There must be things worth spending credits on. And these items exist on a ebb and flow of market supply/demand forces.

There must be multiple ways to convert time into credits (new credits to the server, I'm not referring to simple movement of credits via GTN/player-2-player trades).

There must be sufficient players with sufficient goods to sell and wealth to buy/sell in the economy.

And Bioware must continuously inject new items into the economy to keep people interested in new things to acquire and trade.

Credits dropping from Mobs, and from selling junk is but a small part of the total economy. True, it's more significant in volume for level 55s, and this does trickle down to use for what appear to be wealthy alts. But really, credits are just the lubricant for the economy and the fuel for the GTN. If there were no credits.. then we would be operating in a true barter system, which would be both boring and heavily loathed by today's twitter generation.
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Vandicus's Avatar


Vandicus
04.21.2014 , 07:49 PM | #5
Quote: Originally Posted by Andryah View Post
<snip for brevity>
I think he's got something there actually. Ultimately, we measure our goods in credits, which in turn is measured against effort expended to acquire them. In a sense, all prices on the GTN are derived from the rate at which credits are generated(assuming generated credits are spent on the GTN), and dailies, having a disproportionately high credit generation rate to other content, are probably a source of a good bit of it. Clearly credits in of themselves are not the economy nor generally an end unto themselves, but they, and the effort involved to acquire them, are how we measure value in game.
Darasuum kote ner vode!
Darasuum kote Mando'ade!

Khevar's Avatar


Khevar
04.21.2014 , 08:20 PM | #6
I appreciate some of the insights on this.

Perhaps "drives" was a poor choice of word. Not sure. I was trying to put a finger on what it is that determines how much people are willing to pay for the NON-ultra-rare commodities.

The reason I lean in the direction of dailies, is that I think that most of the liquid assets in this game, across all players, comes from dailies. Even the extremely wealths player are likely to have built up their assets through sales to others that obtained their credits with dailies.

It's been a while since I ran dailies and counted credits. Would it be fair to say that a player could typically make 100k per hour?

Duskrequim's Avatar


Duskrequim
04.21.2014 , 08:23 PM | #7
With no real way to get "rid" of credits in game... The problem will just keep getting worse and worse. That is what destroys most MMO style game economy.

Khevar's Avatar


Khevar
04.21.2014 , 08:26 PM | #8
Quote: Originally Posted by Duskrequim View Post
With no real way to get "rid" of credits in game... The problem will just keep getting worse and worse. That is what destroys most MMO style game economy.
Are you describing something theoretical? Or are you trying to say that problem exists right now?

There are plenty of credit sinks in TOR. Just visit the numerous posts complaining about mod-ripping fees as an example.

DarthTHC's Avatar


DarthTHC
04.21.2014 , 08:29 PM | #9
I think that probably drives the market for normal gear and consumables. I don't think credits-per-hour grinding has anything to do with the prices on high end, rare stuff like hover chairs and whatnot.

Sort of how the day-to-day grind puts the average price of a car in the USA at around $22,000... but the price of a Bugatti Veryon has nothing to do with what wage slaves make.

Also, scarcity does push prices up. The scarcity can be when things first come out - like the first weeks of a new crafting tier. Or it can be things like items from embargoed cartel packs.
Human beings see oppression vividly when they're the victims. Otherwise they victimize blindly and without a thought. ~ Isaac Bashevis Singer

DarthTHC's Avatar


DarthTHC
04.21.2014 , 08:31 PM | #10
Quote: Originally Posted by Duskrequim View Post
With no real way to get "rid" of credits in game... The problem will just keep getting worse and worse. That is what destroys most MMO style game economy.
What problem are you talking about?

The problem crafters have with more and more competition and no quality differentiation driving prices of the stuff we make ever downward?

I don't think credit drains help with that problem.
Human beings see oppression vividly when they're the victims. Otherwise they victimize blindly and without a thought. ~ Isaac Bashevis Singer