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Elevator Passes: Supply and Demand Analysis

24 replies [Last post]
Thu, 12/01/2011 - 16:05
Thinslayer's picture
Thinslayer

I'm going to try to analyze the economic situation involved.

Suppose a large number of people buy the passes.
Group A is FtP players who got the passes.
Group B is PtP players who got the passes.

Group A normally would use crowns to buy CE to extend playtime, but now instead use the pass. Demand for CE goes down.
Group B normally would buy CE with money/crowns, but will now use the pass instead. Both Demand and Supply for CE go down.

Both groups use CE for crafting. That isn't likely to change. However, since the passes are being used, less CE is being used on the elevators and more is available for crafting use. Supply of CE therefore goes up a bit, and crafted items become a bit more numerous.

Overall, Demand went down substantially twice (decreasing price), Supply went down a good bit (increasing price), and Supply went up a tad bit (decreasing price). There should be a net decrease in price coming up.

Did I miss anything?

Thu, 12/01/2011 - 16:50
#1
Hanktron's picture
Hanktron
yeah

There is absolutely no quantitative analysis here at all. What you missed is numbers. We don't have any real way to know how the forces you identify interact and what ends up dominating.

I'm not convinced that demand dropped more than supply. Price went up with the release of the pass. The initial increase in price was probably due to speculation, but price stayed high and actually increased (if my memory serves me correctly).

I'm not convinced that CE supply went up due to crafting. Sounds to me like your analysis is that CE diverted to a different use. This is not necessarily an increase in total supply. It is also possible that CE consumption due to crafting increased. It could be the case that more players are more wealthy due to the pass and the CE they would have used on elevators is now used to craft new toys. Net CE producers could even become net CE consumers. This probably isn't the case for many, but I don't think you can disprove the possibility.

What's a "net decrease" in price? CE is a single good that cannot be broken down into subcategories with different prices. I don't understand why there is a "net" decrease coming up. It's either a decrease, an increase, or it remains roughly the same.

You ignored at least two more groups that are major players in this market, FtP people who remain FtP and PtP people who also do not buy the pass.

Finally, how can we say that the price of CE will go down in the future due to the pass? The new patch could have something to do with it. How do you differentiate?

Thu, 12/01/2011 - 16:44
#2
Kitty-Softpaws's picture
Kitty-Softpaws
The market is wallstreet.

The market is wallstreet. That is all I can say.

Thu, 12/01/2011 - 17:09
#3
Algol-Sixty's picture
Algol-Sixty
When the elevator pass was

When the elevator pass was first announced, I argued that it was possible that it could cause the CE exchange rate to go down, very much like your analysis. Judging by the actual impact on the market, it looks like the overall effect was to increase the CE exchange rate.

One ting to ponder: since the elevator pass is temporary, there may well be people who are buying CE right now, even if they don't need it, in order to stock up for after the elevator pass expires. If the elevator pass was made permanent, that might change.

Thu, 12/01/2011 - 17:16
#4
Sacrednym's picture
Sacrednym
Not quite true

I've personally never met any F2P player who buys CE with crowns for more playtime. As a free player myself, I'm generally not able to make enough crowns on a single tank to purchase 100 CE, even if I were to break even, I still wouldn't do it since I'm not getting a net profit out of the deal, and it ultimately would mean a day of progress wasted. Maybe I have that sentiment because I'm still in Tier 2, and not at endgame, but even then I think I could come up with better uses for my CE than that. As a F2P player, the CE I buy off the market is used exclusively for crafting. Not elevators, not revives, not even for upgrades (yet), just crafting.

Point is, demand is not down nearly as much as you think. You're right that supply is down, but take a Group C, P2P players who bought CE with money for crafting and are now using the pass instead. Do you know what that means, this brought demand UP.

Now I can't give exact numbers, but if I had to guess I'd say that Group C brought demand up more than anyone else brought demand down. Even if that's not the case, demand didn't go down nearly as much as supply, hence higher prices.

Thu, 12/01/2011 - 17:28
#5
Hanktron's picture
Hanktron
lotsa people do

"I've personally never met any F2P player who buys CE with crowns for more playtime."

I do, and I did when I was T2 as well.

Thu, 12/01/2011 - 17:37
#6
Kitty-Softpaws's picture
Kitty-Softpaws
What makes you guys think P2P

What makes you guys think P2P will be buying CE with crowns? They are P2P guys lol. Derp derp derpity. I'm a F2P and MY people are the ones who buy with crowns. I sometimes may buy CE with money but that's on a "sometimes" note and it's only to craft when i don't feel like grinding this many days to buy this much CE.

Thu, 12/01/2011 - 17:51
#7
Hanktron's picture
Hanktron
derp derp derpity

Just because you buy CE doesn't mean you're a net CE producer. Maybe I have the definitions wrong, but I'd put you in the paying category since you do pay on occasion.

There is also the category of player who pays for a large portion of their CE, but not enough to sell any. Additionally, net CE producers may buy some CE with crowns if they think the market will go up, if they prefer CE as a store of wealth (they still produce crowns and have to deal with them somehow), and I'm sure there are plenty of other reasons.

Thu, 12/01/2011 - 17:54
#8
Glowing-Ember's picture
Glowing-Ember
OK, first of all, "my

OK, first of all, "my people"? Is that what this has escalated to?

Second of all, before the pass P2P people bought CE with cr for runs all the time. Not so sure about anymore, since every P2P person I know has the pass.

Thu, 12/01/2011 - 18:32
#9
Algol-Sixty's picture
Algol-Sixty
I've personally never met any

I've personally never met any F2P player who buys CE with crowns for more playtime.

Uh, when I played more, I did all the time, but then, I used to make 200kcr - 500kcr per weekend.

Also, back when the CE exchange rate was 4k and lower, lots and lots of people used CE on gates and it was only after the exchange rate went up that most people went to "ME only for elevators". That is one of the problems with the high exchange rate, OOO is sinking a lot less CE in the clockworks. The high CE exchange rate also means that people need to sell half as much CE on the market in order to get the crowns they need.

There are a lot of competing things in the SK economy and it is hard, especially if you don't have the data that OOO has, to predict the net effect of a change. A high CE exchange rate encourages people to buy CE, but it also discourages people from buying CE.

Thu, 12/01/2011 - 18:54
#10
Hanktron's picture
Hanktron
that explains it

I was having trouble competing for a bit, then all of a sudden it seemed like the market turned back in my favor. You're what happened. Probably on both accounts.

Fri, 12/02/2011 - 01:02
#11
Dawnstrike's picture
Dawnstrike
There's a fairly simple explanation here

Jevon's Paradox states that when the efficiency of a resource's exploitation increases, the consumption can increase. This is most obvious during half-price elevator weekends (crowns per CE goes up).

Here's your issue - you're only thinking in terms of crowns and CE. There is a third, most important, currency: cash. Moreover, there's a fixed rate between cash and CE (barring Steam game trades, CE sales, and other edge cases) and the elevator pass was acting as a substitute for CE (for six dollars, one could buy X amount of CE or the pass). The immediate effect was that every pass represents a loss of CE in the system equivalent to that six dollars (at a discount rate related to whether one would actually buy that CE). So that's a reduction in supply in the crown-CE relationship.

Moreover, most people posit a positive correlation between runs and having a pass - since one must use it to make the pass worthwhile; more runs = more crowns, and moreover, those crowns were not drawing energy out of the system. This is Jevon's paradox at work. The players running free elevators still had mist, so they would be crafting more than usual (twice a day for 2* gear, once per for other gear) and would not always be crafting ice bombs or caliburs for UV rolls; they would also be upping their gear to 3,4 and 5 star...which costs CE in addition to mist (and the more runs performed, the more gear to improve). The demand for CE, while mitigated slightly by pass-users not running elevators on CE, necessarily increases even if players are substituting pass runs for CE runs.

Cumulatively, the crown-CE relationship had nowhere to go but up. Looking at the Eve Online model, there's an easy answer why gametime cards are buyable in both cash and game currency - they provide an effective game-money sink AND a cashout method for CCP (who, unsurprisingly enough, have an economist on staff to monitor and study in-game economies). Had the elevator pass cost an equivalent amount of crowns to [(6 dollars) * X (CE/dollar) * Y (cr/CE)], players would have bought CE with cash, transferred it into crowns using the existing exchanges and stabilized the market without drastically changing the windfall for OOO. By directly drawing out cash from the players, they put a finger on the in-game market because CE-cash has a fixed exchange rate.

Unfortunately, OOO has done a lot of short-term fixes on their exchange without implementing an effective crown sink to solve the problem more long-term. Featured Auctions looks like another of those short-term fixes (high-level players are not going to buy two or more Bechamel Scissors, or change their color, etc, making those sinks nonrecurring).

Sun, 12/04/2011 - 11:33
#12
Carthiah's picture
Carthiah
Woot.

+1 to Dawnstrike! Finally someone who understands economics. Have you studied economics formally somewhere?

A Thought: What if the passes removed a player's mist tank, instead refilling their CE by a roughly equivalent amount? (Perhaps half as fast? I'm not sure about the balancing of it.)

Sun, 12/04/2011 - 13:05
#13
Wodanct's picture
Wodanct
What makes you guys think P2P

What makes you guys think P2P will be buying CE with crowns? They are P2P guys lol. Derp derp derpity. I'm a F2P and MY people are the ones who buy with crowns.

I think how narrow minded Free-To-Play players are has been stated by this.

Anyway, since I shall assume that anyone that bought CE with cash is considering "P2P" I am P2P also then. I bought an elevator pass, but with this pass I have quit buying CE with crowns because why? I don't craft.. there is nothing else I want in this game at the moment. There is no accessories I want. Anyway..

The F2P player base should be more thankful for the P2P playerbase for keeping the game alive rather then moaning about "OMG ce is too much!!!!" all the time. Pay a bit to support the game you spend your day on. Lord knows at Tier 3 you can make crowns even while buying CE from the market if you spam FSC.. for all those that are bored of playing FSC all the time. Buy a pass and go play some other levels.

In short.. what I wanted to say is. When I started I spent $5 for CE for my friend and I. With that I boosted myself to tier 2/tier 3 and my friend. (Back when CE was 3500 per 100). Instead of wasting countless months of my life to reach Tier 3 and then end game (Tier 3 is not end game imo). I did it in about a week and saved months of my life instead of being F2P. Maybe not everyone thinks of their life as so.. but I would gladly fork over $5 if it would give me hours/days/months of time in my life for other things.

Sun, 12/04/2011 - 13:15
#14
Kitty-Softpaws's picture
Kitty-Softpaws
Let me sum it down. F2P and

Let me sum it down. F2P and P2P mean exactly what they say. FREE TO PLAY = YOU PLAY FOR FREE. PAY TO PLAY = YOU PAY TO PLAY. This concept does not matter in Spiral Knights since the game itself is F2P. The person is just paying for certain things is all. But of course, the way this game works, if you want to keep playing then it becomes P2P since you have to pay for CE to keep playing. But it depends on the economy which is funny lol. F2P is determined by the market. This *bleh blah* is hilarious i swear, look at that reminds me of my real life with all this crazy lay offs.

Sun, 12/04/2011 - 13:34
#15
Hanktron's picture
Hanktron
no

I think how narrow minded Free-To-Play players are has been stated by this.

I think you meant "I think how narrow minded Hector-Uribe is has been stated by this."

Sun, 12/04/2011 - 13:47
#16
Fehzor's picture
Fehzor
Dawnstrike wins!

Dawnstrike wins!

Sun, 12/04/2011 - 15:14
#17
Tom-Awsm's picture
Tom-Awsm
@Hector-Uribe

So, P2P'ers buy all their CE with cash, is that what you're saying?

To quote you: "Derp derp derpity"...

Sun, 12/04/2011 - 15:50
#18
Algol-Sixty's picture
Algol-Sixty
Had the elevator pass cost an

Had the elevator pass cost an equivalent amount of crowns to [(6 dollars) * X (CE/dollar) * Y (cr/CE)], players would have bought CE with cash, transferred it into crowns using the existing exchanges and stabilized the market without drastically changing the windfall for OOO.

That concept works for most things that are currently CE sinks, they could be replaced by equivalent crown sinks and OOO would end up getting just as much CE sunk/sold. The elevator pass, however, doesn't work quite as well since it is now possible to generate a lot of crowns per day without sinking any energy. Without the existence off elevator passes, every crown fountained into the game required energy to be sunk on elevators

the fun of elevator passes

A lot of what makes the game funner with elevator passes used to be true back when the CE exchange rate was lower.

F2P vs P2P

I see F2P vs P2P as a spectrum, not black and white. A lot of people buy some CE with RL money, some with crowns. If you want a bright line, you could say that a player is F2P until they buy CE with RL money, the go back to being F2P after they have sunk as much CE as they bought. I think it would be better not to get as hung up on labels though, the idea of the cr<->CE exchange is to allow the different kinds of players to all get what they want.

Sun, 12/04/2011 - 16:14
#19
Hanktron's picture
Hanktron
Jevon's Paradox

I'm kind of curious where you picked this up. I've never heard of it before, which kind of makes me sad. I mean, I've considered it slash heard of it conceptually, I just didn't know there was a name for it.

Sun, 12/04/2011 - 16:34
#20
Algol-Sixty's picture
Algol-Sixty
Jevon's Paradox. The

Jevon's Paradox. The related Khazzoom-Brookes postulate has very interesting ramifications for any sort of conservation efforts that don't cause prices to rise. This also has, uh, "interesting" ramifications for things like controlling health care costs. The cheaper that technological advances make things like dialysis, MRI, dugs, etc., the more money the average person spends on these things. Sure, it goes down for a few people, but since they are used more, the amount spent goes up.

Sun, 12/04/2011 - 16:38
#21
Hanktron's picture
Hanktron
where'd you hear aboot it

Well conceptually I get it, I was just wondering where you came across it. I don't think I've ever heard it by name (I'm perfectly comfortable with the concept).

Sun, 12/04/2011 - 17:12
#22
Algol-Sixty's picture
Algol-Sixty
I was just wondering where

I was just wondering where you came across it.

I don't remember. Maybe HTTP://slashdot.org, or during one of my many rambles through wikipedia, I came across List of paradoxes. The economic section has some doozies. I like the diamond-water paradox, the Giffen paradox and the Edgeworth paradox in particular.

--
Algol-sixty can not assert the truth of all statements in this post and still be consistent.

Sun, 12/04/2011 - 18:26
#23
Kitty-Softpaws's picture
Kitty-Softpaws
The concept of F2P an P2P

The concept of F2P an P2P does NOT go with SK since it's F2P!!!!! So we are not called F2P players or P2P players. It's just who is and who isn't supporting OOO. But! (punch-line). OOO has set up this market of ours WHICH has made both sides meaning also the players who don't spend a dime on this game are also supporting the game thanks to this market. So you see my amigos and amigas, the market is the reason why we all are supporting OOO, SK, and nick regardless of spending or not spending money on this game. Both sides need each other. One cannot live without the other in this game since then the market will crash and we'll be in a regression. Tyvm and now i bid thee farewell. I am not a narrow minded person I am a liberal. <~ Eat this wallstreet.

Sun, 12/04/2011 - 19:01
#24
Kitty-Softpaws's picture
Kitty-Softpaws
It makes me laugh how spiral

It makes me laugh how Spiral Knights is just like my reality. You guys are here doing protests about the market, complaints, demands, wanting to reach Three Rings just like the OWS. Well Occupy Protesters. I seriously laugh out loud so much each time I see complaints about the market and can't help but troll and RP along. <3

Oh man how I love this game.

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