Spiral Knights - The economy: A paper [Updating soon]

The economy: A paper [Updating soon]

45 replies [Last post]

Sat, 06/09/2012 - 10:03

Veacon

On the economy:

This post serves only to educate others who might not be sure how the prices of CE and CR relate to each other in an economic context. It also serves to educate those who think they know what is happening but do not. I will insert my own opinions on the issue but the crux of this post is to tell facts. What you think OOO should do is up to you. What OOO does, of course, is completely up to their own discretion.
TL;DR: More crown bad, less crown good.

Contents:
Demand and Supply
Player’s POV
OOO’s POV
Why more crowns are a terrible thing
The current situation
My own take on the matter

Demand and supply:
‘Demand and supply’ is the governing concept of all contemporary forms of economics. Simply put, a demand for something arises when people have the willingness and ability to buy something. In this case, it will obviously be CE.
CE prices will increase when there is an increase in demand, or a decrease in supply of it. This can be attributed to many factors:

Demand increase factors:
1. Increase in number of new players. They will want to advance in the game and make better gear which requires CE.
2. Players have more crowns. This allows them to have the ability to buy more CE. Recall that demand is intrinsically related to the ability to buy something. If a player has not enough crowns but wishes to buy CE, there is no demand.

Supply decrease factors:
1. Nobody is buying CE. This is where CE promotions come in, in order to instigate a bunch of people to buy CE to increase the supply to bring down CE prices.
Note that CE is constantly being consumed by crafting, CE revives and assorted other CE sinks. When the supply of CE decreases and there is no CE entering the market it becomes a precious good. This is essentially identical to why oil prices have been increasing; oil supply decreasing, demand for oil is still high.
Also note that everything here applies vice versa, i.e. an increase in supply of CE will cause CE prices to go down and etc etc.

The Player’s point of view

I have not spent money on this game other than the DLC, which I think is not particularly worth it but that’s beside the point. I am fully 5* and am considered somewhat an experienced player, and I see it as perfectly possible to reach full 5* without spending any money at all.
Increased CE prices
For the newcomer who does not wish to spend a single cent on this game, high CE prices are a huge turnoff to continue playing at all, as it means crown grinding to even get the first 3* item.
For the regular who is working towards a full 5* set, increased CE prices might be what causes him to quit the game totally, as it is so much harder to get 700 CE to make that item.
For the veteran who has benefited much from farming the pre-patch FSC, and is rolling in millions of crowns, nothing much has really changed. Calls for more endgame content are rampant in the suggestion forum.

OOO’s point of view

My assumption:
Majority of OOO’s income comes from the millions of players who buy small amounts of CE than a select few people who spend hundreds of dollars on this game.
It makes no difference whether you are a loyal supporter of the game or not. To the company, you are just a statistic and a source of income. They have no obligation to listen to you.

So why does OOO want to keep CE prices low?
Truth is, I have no idea either. If they wanted to, they could make Punch cost CE instead of CR and then CE prices would be 20k CR the next day. A few die-hard OOO supporters would still buy CE.
If I had to guess, I would say that a stable economy is one of the key features that draw players to a game. I quit Maplestory about a year ago due to the terrible economy and the fact that Nexon screws its playerbase over on a regular basis. Those who have never played Maplestory before, count your blessings. I was a billionaire in that game and I was considered poor. I feel that OOO’s support service is way better than Nexon’s and is hardly full of beggars, cheaters, and hackers.
By keeping the CE prices low and the economy stable, this brings about interest in the game and attracts more gamers who are potential CE buyers. In addition, by showing friendliness and care to F2P players will also (potentially) make them spread the game to their friends, again attracting more potential CE buyers. After all, OOO loses nothing in the process.
Hence, OOO releases occasional CE promos to incite more people to buy CE and bring down CE prices.

Why is it better for OOO to use CE promos as opposed to crownsinks?
When OOO deploys a crownsink, it becomes a crown supply reduction, leading to a decrease in demand for CE. Remember again that when people have less crowns, their ability to buy CE is reduced and hence demand falls. While this reduces the price of CE in CR, it does not affect the supply of CE. By adopting a CE promo, causing people to buy more CE, they increase supply and also reduce the price of CE in CR. This serves exactly the same purpose except that it also has the added effect of earning more real life income for OOO.

Why more crowns are a terrible thing

Recently, (okay not so recently) I made a post in the suggestion forums calling for more crownsinks, or to reduce the FSC mission payout (which subsequently happened, yay OOO). What surprised me was the number of people who were yelling in that thread about how reducing the FSC mission payout was “the dumbest idea ever”, even after explaining why it is not so. Since this is a new thread, I should explain it again.
More crowns are not going to solve the economy’s problem.

As explained earlier, when people have more crowns, it allows them to buy more CE. This is true. However when CE sellers realize that more people have more crowns and that they are willing (and able) to buy CE at higher prices, their natural reaction is to sell CE at higher CR prices. Hence, when people made so much off the inflated FSC mission payouts, they will just keep on buying more CE to go down the mission again and again.
This also implies that ONLY those who had access to the FSC mission were benefiting from the increased crown payout. All the noobs who had no access to the FSC mission were experiencing increased CE prices but no increase in the amount of crowns that they were earning.
In order to combat this problem of rising CE prices, OOO has to limit the supply of crowns or increase the amount of CE. This is done in 2 ways.

Crown supply reduction
Crownsinks, like Punch or Lockdown, serve to reduce the number of crowns in the economy so that people spend crowns on this rather than spending crowns simply buying CE.
Additionally, crownsinks are able to goad the richer players who are hoarding CE for personal use to sell their CE for less. The auction house has featured auctions which are often expensive and extremely limited (such as love puppy disguises, dragon wings, leviathan blades etc) . Due to the limited availability of such auctions, desperate CE hoarders are compelled to sell their CE for cheap on the market, resulting in a fall in CE prices. Other events include Nonna’s adoption agency as well.
Reduced payouts from runs serve exactly the same purpose. A reduction of crowns from FSC simply brought CE prices down to pre-bug levels.
CE supply increase
CE promos. In the same way a giant sale at a store attracts hundreds of customers, a CE promo will attract buyers. The most apparent was during the Christmas sale when explorer packs went on sale at ridiculous prices. CE prices dropped to about 6k per 100 CE.

More crowns mean more expensive CE. The only way this can possibly be implemented fairly is if crown payouts were to scale linearly so that all crown payouts increase. However this is also impossible because there are fixed crown prices pegged to recipes and Punch, and would hence reduce the difficulty it takes to progress from 1* to 5*, which, IMO, takes out a lot of fun from the game.

The current situation

CE prices now are higher than they were before. This is expected as few are buying CE due to no offers. The latest cat tail and bunny ear offers are being mitigated by the half elevator costs which people are abusing to farm more FSC which again introduces more crowns into the economy, leading to an increase in demand leading to a rise in CE prices blah blah.

The current offers fail to get players to spend their crowns for purposes other than purchasing CE as they are not attractive enough. The lack of any new, crown-requiring game-enhancing device is allowing crowns to build up while the number of purchases of CE with actual money is still low.

My own take on the issue

Personally, I think the greatest thing OOO could do to boost CE sales and attract new players, and even bring back old players who had quite is extremely simple.

Open the core.

While that isn’t going to happen anytime soon, OOO needs to introduce a crownsink which people prioritize over CE. Punch did a good job there, and is still doing a good job. Guild hall upgrades are coming soon so I assume that would be a good sink too. I just hope it isn’t a CE sink but more of a crownsink that is expensive and yet extremely desirable, along the lines of Nonna’s adoption agency. However, something that has actual utility that can only be purchased using crowns will serve this purpose as well.

EDIT:
Thank you all for your kind words of encouragement, it is very much appreciated :)
However due to exams I don't think I will be updating this often/at all so others are free to copy and paste it into their own threads if they would like to continue postulating how CE prices increase or what not.

Sat, 06/09/2012 - 10:15

The-Ark

I agree with everything other

I agree with everything other than the opening the core part, that would be hard to do without ending the story. If you want a crown sink, Guild hall upgrades will handle most of that, and Nonna will return at some point, helping with that too.

Sat, 06/09/2012 - 10:16

Soarel

Agreed good sir.

But as ginger said, don't open the core, it will end the story.

Sat, 06/09/2012 - 11:31

Thewach

What if... the core is a

What if... the core is a gateway to a different world? New maps, bosses and items. As a bonus, you can't use your items from Haven in the new world which is basically like starting over but you can return to Haven whenever you want and use your old equipment. And in that new world, there is another core that leads somewhere else. And then at the end, we find out that we're basically in a system of planets connected by cores and there is also some kind of sun(or two) and we have to unlock some kind of secret.

Sorry, I'll leave now.

Sat, 06/09/2012 - 11:53

Fehzor

Yeah. It is rather hard to go against basic economics. Nice of you to write this, I thought about writing one, although I'd have skipped over most of what you wrote in favor of more advanced theories... like on how a lower CE price forces the game along faster, where newer knights get gear and become FSC farmers faster, which in turn cuts off more new knights from going the distance. We really need larger CR sinks for T3 players to fix this, but they don't make OOO nearly as much money as do CE promotions etc.

@thewach

Not that that's a terrible idea, but the players are already stratified so much over the mission system that its hard to find a party on anything other than FSC as it is. Another thing to point out, is that T3 players with UVs on all of their weapons might not exactly like the idea of "starting over" with none of their gear to aid them in the new frontier.

Sat, 06/09/2012 - 11:54

Trydeth

+1 finally

I finally have a thread I can link CE rage threads to so they can see the error of their ways. You did a wonderful job wording this and getting your point across. Like the rest though, I disagree with the idea of opening the core. A new arcade-only boss would be appreciated though. Missions gave players an easier access to crowns without the need of tunneling through the clockworks to reach them, which, also influenced the flow of crown intake. One didn't used to make as many crowns as they do now with missions. You had to plow through an entire sector before reaching boss depths before and those typically were crown sinks. They just created fluff to keep you entertained while you ventured. Drawing attention back to the arcade would help drag these prices back down essentially. But players don't want to go back to the old. The new is simple and easy and I don't blame them. I do it too. But I also pay for my CE so yeah. :P
We do need a solution and one that is truly entertaining. Maybe open up Cradle's surface instead? For a crown price though. ;D

Sat, 06/09/2012 - 13:41

Tiffanie

Finely written work here. The concepts you present and the insight are true to the fundamental principles of the Spiral Knights economy. I hope this can be seen by others and end the needless threads of rage. However, as others have said, opening The Core would be a terrible idea and strain the future of SK as a game. Players theorize the possibilities that can ensue from opening the core, but this is not something OOO is likely to do anytime soon. I suppose the wait is to create a solid base of players that can benefit the future of SK when The Core does open (as we've seen the tyranny of "I QUIT" threads" here). Needless to say, the story seems quite underdeveloped in its current position, and even with the introduction of Missions there is still a gaping hole in the story. Vagueness isn't appreciated by everyone, so OOO may attempt to fill in the gaps.

For the most part, your rationalization of the SK economy is finely written and it is something, as aforementioned, that should be read by others. Further, I think you should enhance this as SK goes through other phases of change, which is likely to happen soon, so be prepared. Awesome work!

Sat, 06/09/2012 - 13:52

Traevelliath

...

I'm pretty sure the economy is held up by the few people who spend hundreds on the game actually.

Most of them spend about $50 every few weeks, which isn't that much if you have a good job. Most of them sell the CE for crowns for Punch rolling and featured auctions. That adds up to a lot, and you only need a few hundred people doing this to support several thousand f2p players.

Sat, 06/09/2012 - 13:54

The-Hempire

it is clear that someone did

it is clear that someone did their homework

Sat, 06/09/2012 - 14:45

Wodanct

Wall of test TL DR

Warning: Wall of text and words are sure to be misspelled and sentences messed up. Read at your own risk.

If less crowns is a good thing, I would like to see FSC nerfed to match or be slightly higher than a standard T3 run. Most people farm FSC for crowns because its 5 levels and you usually get 7k-8k crowns + tokens that you can later vendor at a worth of 1k each. So the FSC run itself is worth enough for 100 CE and then you still have the crowns the tokens will make you. (This is if you don't play on a elevator pass)

Actually I based this on the FSC mission, I am unsure if the real FSC nets more crowns or not. Though I think the FSC mission could use another crown nerf it in because in reality its worth 10k-11k per run if you count tokens that you can later sell. 10-11k per 50 energy.

I'm asking for the nerf instead because I am guessing the buff of standard t3 runs that I would like isn't very likely.

When I first started playing CE was 100 per 3500 crowns. Not everyone was t3, and not everyone was playing FSC. As time went on more and more people reached t3 and FSC and the cost of CE started to increase as more crowns were getting into the economy. (also the price of rare mats started to drop).

As the price of CE raised Three Rings eventually made an elevator pass which is the best item ever for those that are active and are willing to spend $5. (Most bang for your buck if you are active) Though this item would also serve to increase the cost of CE per 100 as people had even more crowns to send on it. Some F2P fail to understand that even players with elevator passes buy CE from the market. Now you have the mission system which is mostly used just for its quick warp to FSC. No more running the first 4 levels of T3 now you just go straight to the money making run. For 100 CE you can get 14k-20k crowns. (The 20k is the high end of a run + tokens)

With things like this the price of CE will not be going down anytime soon minus the few plunges during promos and actually has a high chance to keep increasing over time.

Sat, 06/09/2012 - 15:24

#10

Coatl

Read your whole thread and I

Read your whole thread and I have to say +1.
Maybe not even just open the core. We just need new content.
The main idea is that we need more crown sinks.

Sat, 06/09/2012 - 15:33

#11

Kitty-Softpaws

http://forums.spiralknights.com/en/node/56366

Your thread makes my thread look stupid.
-1 to OP

Sat, 06/09/2012 - 18:09

#12

Eltia

The market is a feedback loop

That's what gets a lot of people. When you bid a price X for CE on the market, other people (namely sellers, but other buyers also) are using that as input to their own mental model of how much CE should be worth. Then when they ask that magical price Y for selling CE on the market, that output becomes the input to you (the buyers).

So you can't really apply logic to market dynamics. You can, however, make conjecture about the equilibrium state of the market. i.e. how would the market behaviour when it reaches an equilibrium state.

The problem of SK economy is pretty simple. P2P are here to buy the works of OOO. If the works are not satisfactory, there will be fewer P2P. And given enough time, it's not difficult for F2P to own more than one characters that they can use to farm CR on mist. So by design, SK's market would always experience crown inflation and therefore we see CE prices keep going up over time.

In layman's term, F2P and lack of satisfactory progress from OOO are causing inflation. F2P can own and farm with more than one characters using a free resources (Mist). The lack of satisfactory progress causes draining of existing P2P. Result: excess labour (F2P), fewer employers (P2P).

The solution is simple: force these F2P to become P2P and retain existing P2P. You will see CE prices go down by a lot. Why? Because fewer people are buying CE with CR, so sellers would lower their prices.

TL;DR? SK needs two types of continuous resources to function. P2P (inflow of real money) and Contents (that people will buy). You lose that balance, inflation go up because of F2P.

Sat, 06/09/2012 - 18:07

#13

Sorou

Very well-written and

Very well-written and surprisingly well-informed. You have my support.

Now if we could just do something about all the beggars running around Haven...

Sat, 06/09/2012 - 21:15

#14

Veacon

So many replies

Well opening the core is my own wish. People are bound to disagree with it, but that is not the purpose of this post.
As a side note, I do think that the core would be a backup for OOO in case SK started to fail and they needed to move on to other ventures. So if the core opened all knights could return to their homeland thanks to the powered up Skylark.

@Fehzor I did consider writing more advanced hypotheses but I felt that for ease of reading I might want to leave it out for now. After all, if I just state the facts and how basic theory works, people can come up with their own hypotheses. No single hypothesis is 100% correct anyway, due to there being so many possibilities and the fact that everything is intrinsically interlinked.
You did raise a valid point of OOO opting for CE promos as opposed to crownsinks, and I might add that in if/when I have time.

@Traevelliath I have no idea whether it is true or not. However, if it is, I think the basic ideas of my arguments still hold.

@Epic-Truth My doing of homework actually is The Epic Truth
( •_•)

( •_•)>⌐■-■

( ⌐■-■)

@Wodanct any crown nerf will make a whole lot of people rage even though it is usually better for the economy as a whole. Read: Asukalan, Damienfoxy

@Kitty-Softpaws I read your thread.

@Eltia It is rather impossible to force F2Ps to become P2Ps. If SK adopted a monthly pay to play system like WoW I guarantee more than half of the playerbase disappearing. I know I would. Certainly, CE prices would go down by a lot. But this is also in part due to the fact that the amount of crowns entering the market is so low. When there are so few players, the number of crowns gained from the clockworks is much less hence CR is now a much more valuable commodity.
I should add that into the original topic.
Also note that the ability of an F2P player to farm is much less than the ability of a P2P player to farm.

@Sorou Every game will have its beggars. I'm glad SK still has fairly few.

Sun, 06/10/2012 - 07:44

#15

Eltia

@Veacon

SK does not have to adopt a subscription system (the elevator pass already does that). All OOO needs to do is to significantly lower the exchange rate of real money to CE. (Mind you, not by the previous 25% promotion. We need about 75% cut to be called significant.) This would cause a context switch in the market, that CE is no longer a rare commodity and there is little point to stock up a ridiculous amount of CE (it does't offer you more security than saving up in your bank account or skipping a few lunches).

P2P becomes P2P because they want to save time and enjoy more freedom. But the constraint here is time (they pay OOO to save themselves time). F2P, on the other hand, is effectively selling their time for CE. So I do not agree that P2P has an easier time to farm than F2P. (It's the other way around.)

I'll summarize my points as this. SK needs two resources to keep it running: P2P and new contents. F2P is the catalyst to crown inflation due to a free resource called "Mist". The solution: retain P2P, introduce new contents that P2P will buy and convert F2P into P2P.

Sun, 06/10/2012 - 08:00

#16

The-Worst-Knight

Maybe it sounds crazy, but

Maybe it sounds crazy, but ooo must make one thing. Tier 1 players have to pay 10ce for every depth, tier2- 5ce for tier1, 10ce for others, tier 3- 0ce for tier 1, 5ce for tier2 and 10ce for tier 3.

Mon, 06/11/2012 - 01:39

#17

Veacon

Ah I see what you're getting at

@Eltia I can see how that would be better for the playerbase as a whole. But keep in mind that OOO will never reduce the current rate of real money to CE.
The reasoning behind this is very simple. If they were to reduce CE prices permanently, and not through a promo, while it might induce a whole load of people to buy CE in the short run, after a while, when people get used to these CE prices and start complaining, they will expect OOO to reduce CE prices again because, hey, they did it before.

So you see it becomes a vicious cycle. The first time OOO permanently reduces CE prices, lots of people buy, and after a while things go back to normal. But when people get dissatisfied again, they expect OOO to permanently reduce CE prices again, which, eventually, is going to kill their source of income.

The only viable option that OOO can do is use CE promos.

@Ddffcz That's essentially Pay to Play already.

Mon, 06/11/2012 - 06:48

#18

The-Worst-Knight

Veacon, remove mist energy

Veacon, remove mist energy and leave the elevator pass

Mon, 06/11/2012 - 07:30

#19

Razor-Dash

Ideas for new content.

We often see loads of mentions about the Skylark, the Knights mothership, but we've never seen anything of it, if it's in orbit around the Craddle, if it crashed and jettisoned the pods where our Knights come from. Not even some idea of how big it is. I figure that new towns would be a good enough addition to the game, each "town" with its' own theme, NPCs, shops, even items. From what is shown, King Krogmo is friendly to the Knights, so why not a town where he makes his "official" debut, also, since he looks like a big devilite, I imagine the town being populated by devilites, pit bosses, yesmen, and some more.

For a MMORPG, Spiral Knights has too few locations to see, besides the Clockworks. Instead of releasing crappy promos about rabbit ears and cat tails, new areas to explore would be more welcome.

Think about it, a portal device is installed in Haven, which leads to other "safe" and populated areas in Craddle. To use it, you pay a fixed amount of crowns (also depending on how far said location is, we'd need a surface map for that, closest settlement would be a lot cheaper to access, and so on).

That's what I was expecting to (and I'd still love to) see happen, when I first started playing this game.

Mon, 06/11/2012 - 07:32

#20

Rangerwillx

FINALLY someone who knows their stuff.

Mon, 06/11/2012 - 19:14

#21

Veacon

Wat

@Ddffcz

"Veacon, remove mist energy and leave the elevator pass"

What exactly does this serve to do? Also I am not a GM so I cannot remove mist energy and leave the elevator pass.

@Razor-Dash

I do kind of like the idea and I am all for new content but I think a separate thread has to be created in the suggestions forum.

@Rangerwillx

Thanks :D

Mon, 06/11/2012 - 19:56

#22

Incineron

I-

(Noob voice) I know! Why don't we remove the whole system of energy in the first pla---

*gets chased all over haven*

I WAS JOKINGGGG---

Ah. Anyway, I think SK DOES Need to have other areas, after all, its a MMORPG Right?

And the clockworks we have are only 4 gates in a small area after all, even the biggest depths are about the size of haven, bazaar and arcade.

So technically, we Could have another set of clockworks on the other side of the planet or something that leads to the core as well :D New monsters and all that live ther---

Please Don't Hit me. D:

Mon, 06/11/2012 - 21:08

#23

Thich

The game needs more content.

The game needs more content. As much as I love it, the game is awfully short on variety.

When's the last time we had a major release of new content?

Mon, 06/11/2012 - 21:16

#24

The-Worst-Knight

http://farm6.staticflickr.com

http://farm6.staticflickr.com/5184/5636691233_3d422dc137_o.png
Hmm, the train?

Mon, 06/11/2012 - 23:21

#25

Razor-Dash

@Veacon

You were talking about crown sinks, right? My idea also happens to be a crown sink, where players have to pay crowns in order to make use of the "Portal" to visit other villages. And of course, the further away from Haven, the more one would pay.

Tue, 06/12/2012 - 07:57

#26

Eltia

@Veacon

Actually if Nick is reading this, I strongly recommend at least 1-2 Quantitative Easing (or QE), in the form of CE, within the rest of 2012. The idea, as mentioned before, is to cause a context switch in the market, so that the market can "feel" how irrelevant CE really is. Once the ridiculous stocked up CE from P2P start flowing back into the hands of F2P and P2P in lower spending brackets, this would naturally bring the CE prices down (due to lowered demand and increased supply).

Why CE promo would only be like morphine (which by the way, would eventually fail to relief pain), is due to the large amount of CE reserves some P2P hold. Do you think they would buy CE promo with real money, given they already have 5-6 digits of CE? No, they would manipulate the prices in CE market, exchange CE for CR (from the hands of F2P) at high prices and then buy the various accessories / promo items from AH using CR (or combination of CR and CE).

That's why I strongly believe QE is the solution right now. The market has to feel the "shock" for it to be effective. So I would not go anything lower than 50-75% discount.

This may sound crazy to some. But it's because of the improbable, high impact nature of this kind of event that causes the market to think differently.

Tue, 06/12/2012 - 08:46

#27

Derpules

@Eltia

Do you know how many big spenders would rage quit over the fact that they spent twice as much money as they needed to earlier? (An inaccurate statement, economically, but that's how it'd feel.) Answer: a lot.

Tue, 06/12/2012 - 09:24

#28

Sweet-Hope

@ The-Fal i have question:

@ The-Fal

i have question: the market its afffected by players that dont want to sell their Ce? i mean i have 30k Ce how this will affect the economy of the CE prices.
it really matters if a Player that keep their CE can affect the CE market? (i think the answer will be yes according to your post) but i will like a more explained reason.

Thank ya :)

Wed, 06/13/2012 - 02:55

#29

Veacon

Replies

@Razor-Dash yes, but that belongs in the suggestion forum I believe. Its not a bad idea IMO but others might want to comment on it.

@Eltia, for reasons I have already mentioned, supplemented by the reason given by Derpules, OOO will not reduce the conversion rate of real money to CE.
Also, read my reply below as it has answers relevant to your questions.

@Sweet-Hope There is no 'The-Fal' here, but I will do my best to answer your question.

Referring to my original topic, when people don't want to sell their CE, it essentially means a decrease in supply. Supply in this case means CE which people are able and willing to sell. If they have CE but do not want to sell it, there is no supply. Likewise if they want to sell CE but do not have it there is no supply either.

Hence, by holding on to your CE you are essentially causing a decrease in supply (or rather no increase in supply) which will cause the prices of CE to increase since there are fewer people (1 person, you) who want to sell CE. If you do sell CE, lets say for example put up all 30k of your CE at 7.5k per 100 CE, then for a short period of time until all your 30k CE is bought, CE prices will be reduced to 7.5k. This is what is known as an increase in supply, as I have mentioned earlier, an increase in supply leads to a decrease in price. Of course this results in several things.

1, which I believe is most likely to happen, is that promptly after all your CE is bought prices will continue to rise because you as one person, even with 30k CE, control barely any significant amount of the entire market for CE which people are willing to sell. Additionally, other CE sellers, seeing a sudden drop in prices will not want to sell CE at that price because if they wait a while they will get better value for it.

2, other CE sellers, seeing a trend of dropping CE continue to reduce prices so as to ensure that they are the ones making CR. I think this is less likely to happen as crowns are not very urgent in demand so people will not really want to sell CE.

In conclusion, I think one person cannot manipulate the CE market, at least for extended periods of time because
1. Its their loss. If you sell CE at 7.5k you fail to sell CE at 8k so really, who wants to do it?
2. Unless there is a huge collaboration between a whole lot of people who happen to have 30k CE like you, you cannot reduce CE prices for extended periods of time. There will always be people who want to sell CE at higher prices because they make more money.

Eltia, you are assuming that the major shareholders of CE are all collaborating together to raise CE prices but this is not the case. There are many many people who buy small amounts of CE and just want to get extra crowns. This is known as perfect competition in economics which is a rather difficult topic to understand so I won't write it down for you.

Sweet-Hope, I hope this answers your question.

Thu, 06/14/2012 - 07:48

#30

Turnstiles

Excellent write-up, Veacon!

Excellent write-up, Veacon! :D
I don't really see a fall in the CE's prices happening soon unless a major content patch is released soon. As you said, Nonna, 15% extra CE promos and cat tails didn't even cause a budge in the current CE prices.

Fri, 06/15/2012 - 07:55

#31

Veacon

Thanks stiles

Also, I will be updating this thread soon with a section on market structures and why CE prices are hardly being controlled by a small number of players.

It's odd to see so many people assuming that all the rich players are ganging up on F2Ps so as to mooch more crowns off them. Of course, it is true to a certain extent but hardly as extreme as some make it out to be.

Fri, 06/15/2012 - 09:07

#32

Aumir

It is inevitable, Mr Anderson

I defend the opposite: delete elevator costs, delete crafting CE costs, and just make energy a "for looks & extra lives" pay resource. Any measure that just "lengthens" the life support of this current economic model just delays its downfall.

I think that opening the Core will not do anything, in fact the whole concept of "new content lowers CE prices" is wrong: people want to race the new content and get all its goods (token weapons, crafting recipes) the sooner the better, which makes CE demand, which rises the price.

But again, it is my take on it, your reasoning isn't bad either, but I think it just wouldn't work. Opinion is opinion, again. x.x

Fri, 06/15/2012 - 21:17

#33

Veacon

No, Smith, you are empty.

You are right in saying that new content does not lower CE prices. New content requiring crowns will lower CE prices.

Think about what would happen if Shadow Keys cost 100k CR instead of CE.

1. People with loads of CE will sell CE to get CR to go on SL runs, since CE cannot buy shadow keys anymore.
2. More people are selling CE.
3. Prices of CE reduce due to increased supply.

Deleting elevator costs and delete crafting costs would be as drastic a shift from Capitalist to Communist. It could work, in theory, but to spoil an economic model that has served so well for so long? I doubt it.

Fri, 06/15/2012 - 21:42

#34

Sweet-Hope

Sorry Veacon i dont see who

Sorry Veacon i dont see who was the OP but yea thanks for answering me back but i have another question:

Lets Say (im not suggesting this or whatever just asking and in theory) if OOO decide to create for example you can Buy Cr with Real Money like the CE. im not suggesting this but mostly im a very curios about this if OOO also sells CR with money.

Fri, 06/15/2012 - 22:15

#35

Yechezkel

Dollars and sense

I agree with you Veacon, I just have one other thing to add on the subject of Promos; it bears noting that promotional events which include unique items have a distinct advantage over those which merely increase the amount of CE in each purchase by some fixed percentage. The advantage is this: unique item giveaways create incentive to buy CE among players who otherwise do not need CE. This is crucial to lowering the market price. Typically, players buy CE because they need it for something. In most instances this means they sell either none of it, or only a small percentage. Thus, there needs to be a mechanism to convince players who do not need CE to buy CE--as these players are more likely to sell a larger percentage of their purchase. This is the function of the item giveaways; to entice very rich players to buy CE packs that they otherwise don't need in order to nab an exclusive item.

This is why it bothers me when players complain that Three Rings has rolled out "another item promo *implied eyeroll*". These promos a key strategy in keeping CE prices down for everyone.

Fri, 06/15/2012 - 22:28

#36

Snowdusk

You're really into economics

You're really into economics eh, Veacon? *salute*

Well, I do have one single question that matters the most to me: How do I know when is the best time to buy CE, so that I wouldn't spend too much cr on it? For example: when a CE promo arrives? when a special event that sells certain items is in Haven? Thank you, honourable knight!

Fri, 06/15/2012 - 23:01

#37

Pdtopgun

Love this thread

Since you definitely seem to know your way around basic economics, Veacon, maybe you could provide some insight on this crazy idea that's popped up in my brain. What would be the overall impact of OOO deciding to directly infuse CE into the market themselves, in an attempt to forcibly lower trade prices? For instance, say they added a few thousand sell offers at 6500 crowns (or whatever, really); these wouldn't be offers from any individual player, but straight from the top. Presumably, players trying to sell CE on their own would have to drop their own sale prices in order to compete, and at least for the short term, the market would settle around that new price. I feel like there's an analogous technique that a body like the Federal Reserve would use, though I don't know enough economics to identify it. Do you think this would have any beneficial or detrimental effects over the long term, and would it even be in OOO's best interest to do it in the first place?

Sat, 06/16/2012 - 20:57

#38

Veacon

Replies, wow

Sweet-Hope, once OOO introduces an offer where you can buy CR with real money, then what results is the formation of a direct cost relation from CE to CR. Lets say OOO sells 100k CR for 5 dollars and also sells 7500CE for 5 dollars. I don't know any numbers, I'm just postulating.
Hence, with 5 dollars, you can get 100k CR or 7500 CE which means that 100k CR = 7500 CE.
However, since people can farm crowns and not CE, this ratio will soon be overturned as people realize that it is much more profitable to buy CE and sell it in CR since anyone can get CR. Most likely nothing much will result from them selling CR with real money.

But I think it suffices to say that no one will buy CR with real money.

Yechezkel, thank you for your insight. It is quite accurate but sadly it did not play out so well during the last promo. I guess no one wants cat tails.

Snowdusk, I cannot tell you when is the best time to buy CE. I can only tell you when was the best time to buy CE.
Simply put, I don't know when OOO will decide to roll out the next promo or release the next crownsink which will affect the prices of CE. For example, the explorer's pack released during christmas dropped CE to slightly above 6k per 100 CE and that was a good time to buy. (heh heh). But, directly during a promo should be a good estimate.

However also note that if you're trying to buy CE and sell CE to make a profit, there is a 2%(?) taxing fee on the amount of crowns you get.

@Pdtopgun You are correct, the policy is called a price ceiling. A government (or a federal reserve) implements a price ceiling when they feel that a certain good (in this case, CE) costs too much and if the population needs it badly, or it is an essential good, like water/food/housing, then while there is a really high demand for it, meaning that equilibrium price will be sky high, due to the government implementing this price ceiling, the price will be capped at some value.

You can read more about price ceilings here: http://en.wikipedia.org/wiki/Price_ceiling

With regards to beneficial or detrimental effects, a price ceiling always causes a loss in producer surplus and a gain in consumer surplus. I.e, sellers get the short end of the stick while buyers benefit. Certainly, a lot of people could benefit from lowered CE prices, for a while, but to drop it to 6.5k per 100 CE, a lot of people selling CE might be a bit unhappy. Those who need crowns desperately, yes, would lower their prices to 6499 CR, so prices should stabilize at that point for a while. But depending on how long these low offers are implemented, prices will eventually continue to rise.

Sadly, however, it is unlikely that OOO will do this. This results in less people buying CE, since they can now afford CE for lower CR prices, causing less people to feel the need to buy CE with real money. In addition, by putting CE up for CR, they are essentially throwing their own income at the spiral knights population.
Also, when people buy OOO-sold-CE with CR, I'm assuming that their crowns paid go into oblivion, so this acts as a crownsink, except some people will have gotten CE for it.

Sat, 06/16/2012 - 22:16

#39

Shoebox

This thread gets worse every

This thread gets worse every time I read it.

Sun, 06/17/2012 - 03:17

#40

Mini-Mac

CE prices wouldn't jump so much if people didn't try to overbid each other on the market. For example: if the top bid for purchasing CE is 8,200 crowns, rather than bid 8,201, if you bid 8,200, the price will stay at 8,200 that much longer. Prices jump so much because there are so many idiot a$$hats that overbid each other because they want their CE order filled instantly. Just now I watched the price jump 8,238 to 8,450. What MORON would place a bid that much higher? Honestly, I hate stupid, impatient people. And nerfing the FSC payout will NOT help. Currently, 1 FSC run doesn't net you enough crowns to purchase 100 CE, so WTF makes anyone think that nerfing FSC more is going to suddenly make prices drop??? I'm going to laugh if OOO does nerf the FSC payout and CE prices continue to climb.

Sun, 06/17/2012 - 09:41

#41

Yozoraboshi

There are dark forces at work here

CE price manipulators are preying on the impatience of players. The players that I thought were impatient are actually desperate. They are desperate because a group of players are creating a price floor that normal players must offer above in order to get any energy. A group of players make THOUSANDS of offers at a relatively high price and anyone else who wants to get energy must bid above them. When enough people out-bid them, they simply cancel their offers and bid even higher collectively. Proof of this scheme at work is here http://tinypic.com/r/52i8om/6 .These mainpulators are likely loyal p2p players that want to see the ce they buy with cash earn them more crowns. They most likely are also highly established in this game and have enough CE, crowns and cash to have a significant impact on the market. A limited price ceiling made by OOO will have 0 effect on the economy so long as these price manipulators continue their price floor scheme. If OOO made 5000 offers to sell 100 CE at 6500 cr, the first people to get that CE would be the manipulators who made 5000 offers at 8200 cr.The only way it could be effective is if the amount of CE sold at a discount was infinite and permanent.

Sun, 06/17/2012 - 10:41

#42

Hungran

The good ol days

I remember months back when CE was 5k cr for 100CE, sigh*

BTW: If yall wanna deflate CE prices, do the opposite of stock brokers.

BUY HIGH SELL LOW

Mon, 06/18/2012 - 04:13

#43

Veacon

Ho hum

@Mini-Mac
And nerfing the FSC payout will NOT help. Currently, 1 FSC run doesn't net you enough crowns to purchase 100 CE, so WTF makes anyone think that nerfing FSC more is going to suddenly make prices drop??? I'm going to laugh if OOO does nerf the FSC payout and CE prices continue to climb.
I addressed this in the OP already.

@Yozoraboshi
Indeed, rich people are more likely to benefit from a possible price ceiling that OOO puts. It depends on who's reserves run out first.
Well, regarding how the market works, I'll be updating that soon.

Later.

Eventually.

PS I still don't understand why there are still so many CE rage threads flying all around the forums.

Tue, 06/19/2012 - 10:43

#44

Turnstiles

Crownsinks!

I believe a new gameplay mechanic needs to be introduced that rewards small amounts of CE and requires crowns. The Caketastrophe event had really expensive tokens, Nonna had really expensive pets and the Auction House has one-time featured auctions which I believe were aimed to get CE hoarders to sell their CE as well, so I don't think OOO can be blamed for negligence.

What I am trying to say is that something needs to be done so that people want to desperately sell CE for crowns, so that hoarding CE would be less desirable than hoarding crowns. Currently, people with a lot of CE see no incentive to sell them for crowns, and thus prices are kept high as people aren't clambering to sell their CE. Very premium accessories could be sold in the Auction House, perhaps, that would be extremely limited and expensive. The current accessories aren't quite cutting it.

@Yozoraboshi: I couldn't agree more, I can't even imagine what good anyone would achieve from massively inflating the prices.

OOO could set a quota to the maximum amount of CE you could buy in a short period... Surely no one would need so much CE at once :/

Economics is really a handy subject at times!

Tue, 06/19/2012 - 10:56

#45

Sir-Didymus

Elevator passes have taken

Elevator passes have taken people who are willing and able to spend on the game and turned them into crown and material generation machines. Dont forget that for people who are willing to pay the choice must be made as to which side benefits you the most.

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The economy: A paper [Updating soon]