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How to Solve Inflation, But Not Really
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Okay, man. Whatever you say.
To Helsa:
If I may continue, given proportionality with demand and inverse proportionality with supply, with the understanding that on a fine enough scale the market is discrete in nature, would it follow then that equilibrium is a function of the ratio between supply and demand and the market trend, to use your term, that create inflation are the results of sudden disruptions of that ratio?
Yes. Radical shifts in either direction will incur immediate, radical shifts in the opposite. Supply and Demand are like two-sides of a scale. 1:1 ratio would be a perfect world, but getting as close as possible is definitely optimal. If supply shifts to 1.2, then demand will become 0.8 and if demand becomes 3.6, then supply becomes 0.4 and so forth.
But... there's a catch...
Basically, we all need each other, regardless of how things look.
I'm glad you brought this up because supply is what I wanted to ask about next. If you have a market, say, with 200 widgets in it, unless it's a monopoly which would be free to set price at the critical point of the demand curve . . .
(which is where raising the price loses more customers than the price change and lowering the price lowers the price by more than the increase in customers.)
. . . rather than at equilibrium, then whether those widgets are supplied by 5 widget suppliers or 10 really doesn't matter in terms of what the equilibrium price is. Certainly, having more widget suppliers allows the market to reach it's equilibrium ratio quicker or, indeed, more quickly react to inflationary market trends in the equilibrium ratio, but not really on where it eventually settles. In other words, supply is the aggregate amount of widgets not the aggregate amount of widget suppliers.
Does that sound about right?
100%. Yes. That accurately sums up the situation we face in either server; people have realized that flooding the Auction House with an item lets people know that there's a lot of the item floating around the economy. When people see so many of the items in one general spot, they are not inclined to purchase any of them, even if the price is in their favor. Their perception is that there is or will be competition in that market quite soon, because it's not difficult to beat 10 instances of item [x] listed @ 400k when another person simply has to list 1 instance @ 300k every so often to get a quick, consistent sale. This is much more difficult of a situation to push with items like Kraken Hearts or even Erg materials, because they're high in demand and also rarity; one never has to worry much about competition in these fields, so long as the people who can farm them mutually agree upon maintaining the illusion of scarcity while also exaggerating necessity. This is not to say that all sellers of item [x] are collaborating; some items really are just that scarce, but that natural scarcity does fuel the monopoly and items like these make great targets for these kinds of strategies.
However...
Continuing. Conversely then can we say the same thing about the other side of the market but substitute "demander" for "supplier" and "widgets" for "dollars chasing widgets"?
Sure. People can use their dollar to influence and cement a central supplier by choice. People do it in reality, where they "vote" with their dollar as to whom they trust to deliver what they want, for varying reasons. They can use their currency to influence others into supporting the same business, thus creating a sort of industrial avatar powered by multiple sources of income all collaborating together to bolster the target avatar. In this case, the productivity or efficiency of the avatar is no longer relevant as the income is no longer variable in favor of being constant. The avatar can thus do as it pleases with no worry of consequences.
This in itself creates an inverted monopoly. An inverted monopoly can exist to where the demand can essentially force out all other potential competition by their own hand, ironically creating the marketing dilemma of willful submission to an artificially created authority not much different from what's seen in religion.
Moving on. When when speak of "dollars chasing widgets" this is just another way of saying, what economists refer to as "Money Supply" right?
Not necessarily. The amount of dollars in circulation are not relevant to the amount that's chasing the widget production. Only the value of the dollars chasing the widgets are what matters, because they translate the value of the widgets. The amount of money supply does impact the value of the money and would cause the need for more money to chase the product, but it does not impact the value of the product. It just means you have to spend more money to get the same value.
The actual definition of Money Supply is: "the total amount of money in circulation or in existence in a country." This has nothing to do with what's chasing the product or product value, because not all of it is going to be chasing that product. This is like thinking that if you changed the measurements of a bottle of soda to "Milliliters" instead of "liters," then we would all get more soda since the digits are bigger. No, you're getting the same amount of soda; only the metric of measurement changed.
I see what your saying about the "value" of something, you're referring to thereal value of a good. This is the idea of value, despite inflation. Often news reports will talk about "price adjusted for inflation" and so on; that kind of thing. For consumers though, nominal value, price, is a concern. We've already discussed how throwing more dollars into peoples pockets will lead to an increase in prices.
We could morph this discussion into ways of dealing with inflated in-game prices. Together, we have come up with two means of attacking the problem: increasing the supply of widgets, or reducing the number of dollars chasing widgets. The problem is it would be a moot discussion. Nexon is aware of both of these concepts. Since Nexon is a kind of monopoly they would want to set things at an optimal point. In this case there are two competing trends. The more expensive in-game items are, say, in the auction house, the more unhappy buyers are. This translates to less people playing the game. On the other hand, the more expensive in-game items are, the more likely folks will consider the web-shop as an option. Remember, as expensive as in-game items are, the whales aren't complaining. Since the whales are funding the game Nexon doesn't seem to see the current pricing situation as a problem because in their mind the only folks that exist are the ones that actually give them money
100%. I do not disagree with anything you've said in this post, except one thing. I'll get to it.
I do enjoy the discussion and I think Nexon/Devcat does sometimes listen to reasonably presented arguments for changes in the game design. I don't think it's a coincidence that they've suddenly started aiming towards altering chest key reward proportions. I think this discussion as well as other discussions like these have a strong effect on game direction and I'd like to see more of it! I genuinely believe that the developers sometimes do not consider all options on the table, because they sometimes don't know the options exist or how we will respond to them.
I think us players having these discussions helps them understand what's actually going on in the community and what people think about it: actual feedback. If anything, it helps other players also understand what's going on; we can make changes on our own behalf as players of the game and move forward with new ideas that some of us have never considered.