Eve Economy

[Predator Irl]

Seems like there have been changes to the salvaging in this patch. Since Trinity I've been getting a lot less melted caps but last night I got a heap of them when ratting.

Also the Align to button rocks! As soon as I start the salvaging process, click align to and by the time Im finished salvaging I can warp instantly. Fleet ops are going to move SO much faster!

[lac]

Did it go any faster? A while ago they were talking about considering changes that would make dedicated salvageships (multiple salvagers) obsolete.

[IainC]

Did it go any faster? A while ago they were talking about considering changes that would make dedicated salvageships (multiple salvagers) obsolete.

I was missioning last night and salvaging did seem to be faster but I have no actual data to support that only my subjective feeling. I doubt that dedicated salvage boats would become obsolete even if the salvaging cycle was made faster, I don't often have multiple salvagers on the same target, rather I use my four salvagers and four tractors to process four wrecks at the same time. That's an advantage you can't obsolete by making a single salvager better.

[ajax34i]

They can do it if they introduce an AoE tractor field module, and an AoE salvager module.  But they won't do that.  Looting should be a lot easier, but shrug.

[Endie]

The carebear devblog a few months ago said that they were looking at changing salvaging into a mini-game, with more interaction.

It has to take roughly the same amount of time: more salvage per hour will just inflate the salvage economy.

[Goumindong]

The carebear devblog a few months ago said that they were looking at changing salvaging into a mini-game, with more interaction.

It has to take roughly the same amount of time: more salvage per hour will just inflate the salvage economy.

Deflate. Prices would go down not up. Increasing salvaging rates means more salvage means its worth less than it was before. Such, the price decreases.

If volume increased more than the price decreased then salvaging would become more profitable and the prices of rigs would decrease instead of just the prices of rigs decreasing. If volume increased slower than the price decrease then salvaging would be less profitable and the prices of rigs would decrease.

The question of what happens would then become the question of why eves markets are inelastic.

[Endie]

The carebear devblog a few months ago said that they were looking at changing salvaging into a mini-game, with more interaction.

It has to take roughly the same amount of time: more salvage per hour will just inflate the salvage economy.

Deflate. Prices would go down not up. Increasing salvaging rates means more salvage means its worth less than it was before. Such, the price decreases.

If volume increased more than the price decreased then salvaging would become more profitable and the prices of rigs would decrease instead of just the prices of rigs decreasing. If volume increased slower than the price decrease then salvaging would be less profitable and the prices of rigs would decrease.

The question of what happens would then become the question of why eves markets are inelastic.

I deliberately used the language I did, rather than "inflation in the salvage economy", because I meant that, here, salvage was the inflationary reward in the same way that in, say, SWG, money itself was the problem reward.  In other words, masses more salvage makes salvage worth less.  I'm not sure about the inelasticity you mention, however, given that substantially cheaper salvage would lead to lower T2 prices, which would increase the size of the market for T2 items, which in turn would boost production, increasing the demand for salvage.  This supposes that demand is the constraining factor on T2 production, and not supply, but I'd hold that to be the case, now that cartels no longer exist.  We already see massively more T2 items in circulation compared to a couple of years ago, now that the penalty for loss is so much more reasonable.

Anyway, for those not up to speed, Jade really hates Goumindong, which should buy him some credit round here.  Just don't accept his fitting advice or engage him on the subject of logical fallacies.

[Predator Irl]

Did it go any faster? A while ago they were talking about considering changes that would make dedicated salvageships (multiple salvagers) obsolete.

I don't think it was any quicker, no. But having said that, I was salvaging with a single salvager on a Raven, so I can't be sure.

[Amarr HM]

Guys decreased salvage prices = decreased rig prices so this is a good thing and then making salvaging more interesting.

http://myeve.eve-online.com/ingameboard.asp?a=topic&threadID=663677

An idea for a salvaging boat I posted when I was sick around xmas.

[Goumindong]

In other words, masses more salvage makes salvage worth less.  I'm not sure about the inelasticity you mention, however, given that substantially cheaper salvage would lead to lower T2 prices, which would increase the size of the market for T2 items, which in turn would boost production, increasing the demand for salvage.  This supposes that demand is the constraining factor on T2 production, and not supply, but I'd hold that to be the case, now that cartels no longer exist.

Short answer:

A drop in the price of salvage via increased salvaging rewards is not necessarily a bad thing. It can be a good thing for both salvagers and consumers.


Long Answer"
A few things:(3 is the real heart of the answer)

1. Semantics: Now that this is clarified it doesn't matter, but i when i think "inflation" i think "prices of this good are going up". If prices go down, that is deflation. From now on, lets just state plainly whether prices on the good are going up or down and avoid any confusion.

2. I am fairly sure that salvage has nothing to do with t2 production outside of t2 salvage making t2 rigs. And i doubt people are going to be exploding more t2 ships just for the fun of it to make more t2 salvage. There never was a monopoly on rig production and there probably never will be. You might be confusing salvage with moon minerals. Which is where the complaints of costs in t2 production have been coming from.

3. I mention inelasticity because typically goods in eve are inelastic. You can see this by watching the markets on most major items. There are often huge changes in price with little to no changes in quantity. That is to say price changes do not effect volume changes much. Figuring out why this is is important to determine whether or not a change to salvagers will benefit the consumers or both the consumers and producers. Its important because at some point, rigs are likely to stabilize like all other goods do. If prices on modules are inelastic because demand is inelastic once market volume meets ship market volume(I.E. there is demand for ships and all other demand is a function of fitting those) then we have a bit of leeway to figure out how much price can decrease based on how many ships are currently rigged. If not, and its for some other reason we don't know, we cant. (It probably is, with non-fitting components being inelastic based on necessity to hold space/do whatever it is you are doing. Aside: I am sure there is an interesting study on elasticity and war floating somewhere in eve)

E.G. Lets say 30% of ships are rigged and time on market is low. That means that rigs can, roughly, increase in volume by ~230%. Or "we can increase salvage rates by roughly 230% before we are likely to start making salvaging as an action become less valuable in terms of isk/hour than it was previously". Since we can expect that an increase in supply will increase producer surplus up until the point where demand becomes inelastic. If we can guess or figure out where that is(and iirc there is no other way to do it with such radical changes) based on what we know of the system we can figure out how much we can increase salvage rates before it starts being a bad deal for salvagers.

Anyway, for those not up to speed, Jade really hates Goumindong, which should buy him some credit round here.  Just don't accept his fitting advice or engage him on the subject of logical fallacies.

My fitting advice is top notch :colbert: and i have since learned that explaining to Jade when he is using a logical fallacy does not work. Thanks for showing me that.

[Endie]

No, you're right: I had somehow persuaded myself that there was a role for salvage in T2 production (excepting rigs).  No idea where that came from.

[Predator Irl]

 In other words, masses more salvage makes salvage worth less.

I think Endie has a very valid point here and I think its what we are already seeing in the market fluctuation already. Before January the price of certain items e.g. melted caps were worth nearly double their price. If we increase the supply, there is nothing to say that demand will increase, therefore we could end up filling current market orders at the current value. All the lower market orders will then be the next highest selling price, gradually lowering the value of salvage to a point where it may not be worth while.

At this point we will probably see a small raise in their value as they become a rare commodity as salvagers die out. But it will have a yo-yo effect.

The demand for the goods produced also need to increase for the salvage worth to increase, which will probably happen after the cost of production is lowered, then the price of the sale goods lower and demand possibly raises, but again I think this will also be affected by the number of traders / buyers / population in Eve.

[Phildo]

At this point we will probably see a small raise in their value as they become a rare commodity as salvagers die out. But it will have a yo-yo effect.

If you want to sound professional, you have to see "approach equilibrium."

Also, I'm pretty sure it's ok to say inflation in regards to supply and demand as well, although it's been a while since my last economics course.

If CCP wanted to increase the number of rigs bought and sold on the market, one thing they could do is reduce the number of skills required to fit them.  I don't use rigs right now because I don't want to spare a week training a skill that has such limited (and expensive) applications.

[IainC]

If CCP wanted to increase the number of rigs bought and sold on the market, one thing they could do is reduce the number of skills required to fit them.  I don't use rigs right now because I don't want to spare a week training a skill that has such limited (and expensive) applications.

The skill requirements for t1 rigs is pretty trivial tbh, the thing that puts me and I suspect others off using them universally is the fact that a single t1 rig can often cost more then the hull of the ship you fit it to and if the ship goes pop it's lost automatically. They also reduce the flexibility of your ships. With other big ticket items you can recycle it around different ships or fits, with rigs you're locking a particular hull into a particular role, I had to sell my rigged Megathron hull at a loss recently because the rigs it had were no good for the new role I wanted to use it for.

[Jayce]

Causing rigs to die with the ship is a good way of pushing the value equation in the direction of the producer.  Hopefully that's obvious - you can't reuse a rig so you have to get a new one if you get a new ship, thus pulling from the supply of salvage.

Since producers are typically poorer and newbs (trival to train salvaing) and the producers are typically rich fliers of T2 ships, IMO that's a good thing.  Pure capitalistic redistribution of wealth 

edit: btw, I wanted to mention that I don't know this Goumindong from Adam, but as his walls of text are actually interesting, Goumindong for CSM!  That Jade hates him is pure bonus.

[Goumindong]

If CCP wanted to increase the number of rigs bought and sold on the market, one thing they could do is reduce the number of skills required to fit them.  I don't use rigs right now because I don't want to spare a week training a skill that has such limited (and expensive) applications.

The key part of your sentence there is "expensive" if the price went down you would be more inclined to use them. This is the standard demand graph. The question i posed above was "how much more would you all be inclined to use them if the price dropped x%". The same thing happened with t2 when invention came in. Volume increased, price decreased. Consumer and producer surplus increased(absent externalities due to violence)

You can fit a rig to a ship and then give it to another person to use. That person will take the full rig penalty if they do not have the skill, but they do not need the skill to fly the ship. So if you wanted, you could have a corp-mate fit the rigs for you then give you the hull. Many times this is not reasonable due to the penalties. But oftentimes it is.

I fly a lot of ships rigged. I have energy weapon rigging 4 now. It was worth every second.

Also, I'm pretty sure it's ok to say inflation in regards to supply and demand as well, although it's been a while since my last economics course.

Technically no. Though we would probably understand what you meant. "Inflating" would be o.k. but not inflation. Inflation is when price increases but value(or supply or demand) does not. Its a purely monetary phenomena.

[bobandabit]

If CCP wanted to increase the number of rigs bought and sold on the market, one thing they could do is reduce the number of skills required to fit them.  I don't use rigs right now because I don't want to spare a week training a skill that has such limited (and expensive) applications.

The key part of your sentence there is "expensive" if the price went down you would be more inclined to use them. This is the standard demand graph. The question i posed above was "how much more would you all be inclined to use them if the price dropped x%". The same thing happened with t2 when invention came in. Volume increased, price decreased. Consumer and producer surplus increased(absent externalities due to violence)

You can fit a rig to a ship and then give it to another person to use. That person will take the full rig penalty if they do not have the skill, but they do not need the skill to fly the ship. So if you wanted, you could have a corp-mate fit the rigs for you then give you the hull. Many times this is not reasonable due to the penalties. But oftentimes it is.

I fly a lot of ships rigged. I have energy weapon rigging 4 now. It was worth every second.

Also, I'm pretty sure it's ok to say inflation in regards to supply and demand as well, although it's been a while since my last economics course.

Technically no. Though we would probably understand what you meant. "Inflating" would be o.k. but not inflation. Inflation is when price increases but value(or supply or demand) does not. Its a purely monetary phenomena.

I always see you spout lots of words on eve-o let me see yo skills dude.

[Endie]

If CCP wanted to increase the number of rigs bought and sold on the market, one thing they could do is reduce the number of skills required to fit them.  I don't use rigs right now because I don't want to spare a week training a skill that has such limited (and expensive) applications.

The key part of your sentence there is "expensive" if the price went down you would be more inclined to use them. This is the standard demand graph. The question i posed above was "how much more would you all be inclined to use them if the price dropped x%". The same thing happened with t2 when invention came in. Volume increased, price decreased. Consumer and producer surplus increased(absent externalities due to violence)

You can fit a rig to a ship and then give it to another person to use. That person will take the full rig penalty if they do not have the skill, but they do not need the skill to fly the ship. So if you wanted, you could have a corp-mate fit the rigs for you then give you the hull. Many times this is not reasonable due to the penalties. But oftentimes it is.

I fly a lot of ships rigged. I have energy weapon rigging 4 now. It was worth every second.

Also, I'm pretty sure it's ok to say inflation in regards to supply and demand as well, although it's been a while since my last economics course.

Technically no. Though we would probably understand what you meant. "Inflating" would be o.k. but not inflation. Inflation is when price increases but value(or supply or demand) does not. Its a purely monetary phenomena.

That depends on which school of economists you listen to.  Several of the Austrian school would agree with Phildo, for instance.

[MahrinSkel]

I like this one.  Let's keep him?

Anyway, you're right, rig costs strike a balance with component supply.  However, the production/demand balance isn't the only piece of the equation, there's also supply elasticity.  If salvage components are worth less, it's not as attractive to salvage, especially if you're dragging a dedicated salvage boat on a second account.  If you just increase the total amount of salvage per wreck (as CCP did a couple of months after Salvage went in) this works out to a wash, more components that are worth less individually, and since volumes are fairly low this isn't a problem.  But you can still run into practical boundaries on how much salvage you can process.  Reducing the salvage timer makes it a little more attractive and increases total incoming salvage slightly, but turning it into a mini-game paradoxically could *reduce* the total salvage supply because doing it absentmindedly on a second box while your main continues to rat/mission is less viable.

--Dave

[JoeTF]

Lol, Goumindong, lol.

I would rather have four Jades than him. Yes, he really is *so* special.


PS, last time I checked rig bonuses and penalties were applied once, during fitting.

[Endie]

Lol, Goumindong, lol.

I would rather have four Jades than him. Yes, he really is *so* special.


PS, last time I checked rig bonuses and penalties were applied once, during fitting.

It should be noted that - so far as I remember - JoeTF has yet to say "that Goon ____ sure is a great guy".  It should further be noted that Jade is pretty tight with a lot of senior Bob.  Fuck knows how they stand him, but they do.

And you're right, Joe, you can fit a rig on a ship and give it to someone else and (at least last time I checked) they can use it.  I didn't know that penalties weren't even recalculated when you increased your rigging skill, though: you sure?

[SillyFish]

Lol, Goumindong, lol.

I would rather have four Jades than him. Yes, he really is *so* special.


PS, last time I checked rig bonuses and penalties were applied once, during fitting.

It should be noted that - so far as I remember - JoeTF has yet to say "that Goon ____ sure is a great guy".  It should further be noted that Jade is pretty tight with a lot of senior Bob.  Fuck knows how they stand him, but they do.

And you're right, Joe, you can fit a rig on a ship and give it to someone else and (at least last time I checked) they can use it.  I didn't know that penalties weren't even recalculated when you increased your rigging skill, though: you sure?

Knowing how they stand him mean they stand on chairs and he stands and slurps? Also are senior bob people cool with peoke? I honestly do not know which one is worse.

[Goumindong]

I like this one.  Let's keep him?

Anyway, you're right, rig costs strike a balance with component supply.  However, the production/demand balance isn't the only piece of the equation, there's also supply elasticity.  If salvage components are worth less, it's not as attractive to salvage, especially if you're dragging a dedicated salvage boat on a second account.  If you just increase the total amount of salvage per wreck (as CCP did a couple of months after Salvage went in) this works out to a wash, more components that are worth less individually, and since volumes are fairly low this isn't a problem.  But you can still run into practical boundaries on how much salvage you can process.  Reducing the salvage timer makes it a little more attractive and increases total incoming salvage slightly, but turning it into a mini-game paradoxically could *reduce* the total salvage supply because doing it absentmindedly on a second box while your main continues to rat/mission is less viable.

--Dave

iirc, we were only talking about a supply increase, so in that case only the demand elasticity would matter. But yes, those are all certainly concerns of adding a mini-game in and there are limits to how much you can increase supply before you start to run into standard efficiency boundaries. However, those can be avoided by cleverly working the increase. If you double drops and half the size of the components then you have avoided it. If you took all rig BPs and halved their input you would have the same results for the players as well though the welfare increases would be caused by demand shift rather than a supply shift.

[MahrinSkel]

Still not that simple.  A halving of Rig component recipe requirements could be counted on to cut rig costs, at least in the short term, but if that did not at least double Rig demand, prices of components would fall, discouraging the act of salvaging, reducing supply and driving costs back up.  So there'd be a new equilibrium reached, one with less money for the salvagers.  The real question is: Where do rigs leave the system?  The cheaper they are in relation to their effectiveness, the higher the usage.  And the biggest complicating factor is that the same components get used across multiple rigs.  If you want to buy a rig, you're not just competing with everyone who wants to buy that rig, but with everyone who wants to buy *any* rig that uses the same components.  Since there are definite sweet spots in the available rigs, prices are driven by those rigs and everything else derives their price from what the same components would be worth as part of one of those.

It would seem far more effective for CCP to examine the relative usage of the various rigs, and dial down the component costs on all the ones that get used less.  With them being more cheaper, they'd get fitted as alternatives to the "best of breed" rigs, more rigs would be on board ships that get destroyed, and as a result demand (and prices) would go up across the board for components.

What it comes down to is that if someone is fitting a sniper BS, a HAC, or a capital, something very expensive, rig prices can be very high.  But to put rigs on a interceptor or cruiser, something with a high death rate and lower base value, you've got to have cheaper alternatives (or money to burn).  Just playing with the ends of the production chain isn't going to do much to change the basic dynamics.

--Dave

[Kitsune]

I have yet to sign with factions because I just know that with my luck I'll sign up, get a mission, head towards the system, then OMG GATE CAMP after the first jump and get completely ganked.

[lac]

I didn't know that penalties weren't even recalculated when you increased your rigging skill, though: you sure?

It used to be like that. No clue if they fixed it in the last year or so.

[Goumindong]

one with less money for the salvagers

This is "determined" by the elasticity. This is why you attempt to find where the elasticity becomes inelastic.

E.G. lets say you do the first thing and demand is elastic. For every 1% that prices change, volume will change >1%.  So if prices go down 50%. Then volume must increase by over 200%. Making this really simple and ignoring the calculus which proves it. If our elasticity is >1(defined as elastic), then while this is occurring any change in volume must necessarily create a situation where p1 x v1 < p2 x v2(where p1 and v1 are the original price and volume and p2 and v2 are the new price and volume).

If we are inelastic then p1xv1 > p2 x v2 and if we are unitary then p1xv1 = p2xv2

Such if the elasticity of demand is >1(i.e. is elastic) then the gain for producers MUST be positive.

If elasticity of demand is <1(inelastic) then there will be a net loss for producers.

An easy way to prove this is to draw an isosceles right triangle with the hypotenuse sloping downward and to the right. Label the vertical side "price" and the horizontal side "quantity". Label the hypotenuse "demand" Put a point in the mid point of the hypotenuse. At that point the line is unit elastic. At points to the left of the line its elastic and at points to the right of the line, its inelastic elastic.

Take a pen or pencil and lay it vertically on the med point of the line. Where that intersects, draw a line from the hypotenuse to the quantity line and from the hypotenuse to the demand line. Label the vertical line q2 and the horizontal line p2.  Move halfway between the line q2 and the price line and do that again but this time label the lines "q1 and p1". Compare the areas defined by p2 x q2 and p1 x q1. Note how the area p2 x q2 is larger than the area p1 x q1.

Do the same on the other side of the line q2 and label the lines p3 and q3 note how p2 x q2 > p3 x q3. The elasticity of supply doesn't matter. Since this is a shift in supply, the producer welfare will always be later(think of the "gain" coming from the left and you can see how that makes it easy to compare the areas)

Such, any change that increases the supply of rigs will only be bad for salvagers if there is a malfunction in the markets(I.E. not equilibrating as they should) or the demand for rigs is inelastic.

Figure out where the demand for rigs becomes inelastic and you can increase salvage(or decrease what is needed) up to that point with no worries about hurting the people who salvage.

It would seem far more effective for CCP to examine the relative usage of the various rigs, and dial down the component costs on all the ones that get used less.  With them being more cheaper, they'd get fitted as alternatives to the "best of breed" rigs, more rigs would be on board ships that get destroyed, and as a result demand (and prices) would go up across the board for components.

This is another issue all together and has everything to do with inter rig and ship balance rather than whether or not increasing salvaging rates will benefit salvagers. If you increased supply of all components then the prices of all rigs would come down based on their demand elasticity. If some less valuable rigs are pegged to more expensive rigs because of component overlap they will continue to be so while the more valuable rigs get more generalized use as their price drops for everything. Though it is one way of increasing demand for salvage components whether or not it will be beneficial depends on the elasticity of demand for these products since you are essentially increasing supply of the rigs which will have the same effect as shown above.

[MahrinSkel]

Ahh, but you see, you're thinking like an economist, and I'm thinking like a game designer.  In a classic economic situation, if a material is used for two products, and the demand for one of those products is causing the other to become economically non-viable, the second manufacturer can try to find alternative goods, they can try to redesign and use less of it, etc.  And if none of that works, then he simply can't make a profit making that product and he doesn't.  But I'm a game designer, I can do what neither the invisible hand nor the regulator can do: Ignore the laws of physics.  After all, I wrote them.

--Dave

[apocrypha]

Goumindong is making the exact same mistake that nearly all of those versed in economic theory, including CCP's own resident economist, Dr.EyjóG, seem to make when discussing EVE (or any other MMORPG for that matter):

Their theories and discussions are all based on modern capitalist economic theory. And EVE's economy is not a capitalist economy. There is no wage-indentured proletariat creating profit for a capital-owning ruling class via the surplus value of their labour. There is no dead labour locked up in capital infrastructure and there is no relationship between the flow of profit and any kind of means of production that depends on that profit. MMORPG's have a strange breed of artificial economy where everyone is essentially some kind of petit bourgeoisie member creating profit for themselves out of nowhere (e.g. ISK faucets).

Yes, that's a simplification, but let's not get into stupid pedantry and ignore the main point of my argument here - that capitalist economic theory, which is so piss-poor at explaining the actual, real-world, undeniably capitalist world economy, is of almost no use whatsoever in explaining what goes on in a fake, restricted, controlled and artificial non-capitalist economy like EVE's.

Which is why 99.5% of what you post, Goum, is, has been and always will be, utter nonsense. And just because the residents of places like SHC and EVE-O have realised that you're full of crap doesn't mean you can wander the internet to find other boards where you're less well known (like this one) and the pages of jade-like convolutions you post will suddenly be hailed as perfect sense and manna from heaven. It's still crap wherever you post it.

[Faust]

What's all this have to do with Shadowbane anyway?

[lac]

I don't know man, I asked if my salvaging would be any quicker in the new patch and got hit by a couple of pages of economic theory.
These internets sure move in mysterious ways.

[Amarr HM]

Not exactly sure if I'm correct in saying this but the salvage discussion is based on the fact that recovered salvage amounts have potentially increased, thus cheapening the salvage. It doesn't really matter to the average ratter if the prices are lowered cause you are still making same amount at the end of the day, why? cause you have more salvage in your cargo to sell. It will also have a knockon effect of cheapening rigs on your ships so you won't have to buy back your salvage (cause thats what you are doing everytime you purchase a rig) at such high costs. Some shield rigs sell for 2 million each while armour ones dont come less than 14 million at the minute increased salvage amount is something I suggested before in GD forum.

[Amarr HM]

Currently it's very easy to make rigs and it seems the current profit margin is so low only the specialists are making them. So if you increase amount of salvage gained it will lower the price of salvage, initially people will start making a huge profit selling rigs and it will attract more people to producing them this will start driving the price down towards it material cost. Eventually there will be more suppliers to match the increased demand meaning that it will drive the price closer to its material cost in this case increased demand means increased suppliers.

[Simond]

I have yet to sign with factions because I just know that with my luck I'll sign up, get a mission, head towards the system, then OMG GATE CAMP after the first jump and get completely ganked.

Welcome to PvP. 

[Endie]

Not exactly sure if I'm correct in saying this but the salvage discussion is based on the fact that recovered salvage amounts have potentially increased, thus cheapening the salvage. It doesn't really matter to the average ratter if the prices are lowered cause you are still making same amount at the end of the day, why? cause you have more salvage in your cargo to sell.

The trouble is that, once you get enough salvage in peoples' holds, supply exceeds the upper end of the demand curve: there's just nothing anyone can usefully do with the extra salvage.  At that point, prices plummet.