The market caps of EVE
Tritanium Prices going crazy
EVE, ever since it’s inception, has had insurance. And insurance is great, right? You can fly a battleship and almost make ISK off it due to insurance. Insurance IS very important for EVE and it’s economy. Say that EVE didn’t have insurance, what would happen? People would stop flying large ships, like Battleships. And they would fly less, lose less ships and hence stop consumption, ruining EVE’s economy. Consumption is very essential in any economy, meaning that insurance is critical in EVE.
But what we have seen over the last few months is that there has been price deflation in the mineral market, causing ship prices to also go down. That’s good, right? Well, what you’ll find is that the difference between the price of the ship and insurance cost compared to the insurance payout becomes so large, that there’s a profit to be made. What happens then? People buy ships and and self-destructs them.
This causes an increase in demand, increasing price. This means that there is an artificial minimum price of minerals. Furthermore, insurance is an ISK Faucet, which can be argued to be a further cause of price deflation, creating a multiplier effect.
Another “Market-cap” is the current NPC-market mechanics. CCP has artificially capped the price-range of which the price of a NPC-item can move. Say that there was a sudden spike in demand for Capital Ship Blueprints, wouldn’t you expect the price to increase drastically? That’s supply and demand, right? As it stands, the maximum price increase according to a roundtable at Fanfest 2009, is 15%.
For consumables like Nanite Paste and commodities used for POSes, this is a tragedy. It makes NPC-trading limited and it doesn’t make for an immersive feeling of the market. And it doesn’t reflect the behavior of the players very well, which is otherwise what prides itself on having: A totally player-driven market.
Come 2010, I hope that CCP will look into the artificial market-caps there is in place and nerf the hell out of them. However, it has to be done carefully. If they are too heavy-handed, it might decrease the overall level of consumption in EVE, which is going to cause a recession. It would be major economic event, and it will effect the economy considerably in the short-medium run. However it’s a change that has to be addressed soon, preferably in 2010, before Dust and Incarna ships.
Tags: Insurance
This entry was posted on Friday, November 27th, 2009 at 7:27 pm and is filed under EVE Online. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
November 28th, 2009 at 11:37 am
Hmm, not really a good think I got 3mill of dense veldspar, it better get back up.
And market caps should just be removed entirely even if the overall consumption drops it would restore itself because everything that’s insanely priced would eventually be put up for less till it gets sold.
December 4th, 2009 at 1:31 am
Aren’t insurance values calculated using a base mineral price that is fixed in the game system? If this price was able to fluctuate, that would mean insurance prices would fluctuate with the mineral values and prevent any exploit.
What do you think?
December 8th, 2009 at 7:46 pm
Furthermore, insurance is an ISK Faucet, which can be argued to be a further cause of price deflation, creating a multiplier effect.
You have that backwards. Self-destruction of insured ships takes goods out of the economy and puts cash in, which is inflationary on both counts. This inflation counteracts the price decreases that caused self-destruction to get profitable. It provides a negative feedback loop, which stabilizes the system(as evidenced by the fact that prices have stopped dropping)not a positive one that accelerates the change.
December 8th, 2009 at 7:54 pm
Herschel,
I very much disagree.
Monetary inflation amplifies the effect causing price deflation. Why? Because there’s more ISK in the system for people to utilize and compete. That drives down prices. It’s mudflation, basically.
December 8th, 2009 at 7:56 pm
Hans,
I believe that CCP has tweaked the insurance payouts once or twice. However the current insurance payouts are still static from at least 2-3 years back.
Would a variable payout, based on the overall market prices work? Yeah, quite possible. However I find it unlikely to happen as it would require to be done during downtime, which CCP wants to avoid at any cost now.