[MUD-Dev2] now, economics (was RE: stock market mechanisms in muds)

[Michael Sellers]

Matt Chatterly wrote:
> When considering "sinks", which I think we all agree are vital in
> sufficient quantity and strength for a "healthy" virtual economy ( e.g.
> one which will balance out), let us consider for a moment the problem of
> having "cash only" sinks.
> 
> Lets assume that you run a shop. Your cash sinks are rent, upkeep,
> purchase of stock, wages, etc. You make your money by selling
> "manufactured goods" (in this example) to end consumers, and turn a tidy
> profit. We'll ignore the part of the chain beneath you for now
> (obtaining raws materials, refining, etc).
> 
> What happens to the manufactured goods?
> 
> If there are no sinks at this level (product-sinks?), then eventually,
> everybody who wants a flubble will have one, and noone will buy any more
> flubbles (or not very many, anyway).

In addition to the sinks you mentioned (recombination, lifespan, decay),
there is another highly useful one: export.  That is, there is an export
market that always wants more flubbles.  The price the export market is
willing to pay is less than the local market usually pays (unless you flood
and satisfy the local market), but this sets an effective lower bound on
what you can make for your flubbles.  The export market is elastic in that
it can accept large numbers of flubbles without depressing the price much,
and it is resilient over a relatively short period of time.  Add in seasonal
and economic-shock variations to the flubble-export market price, and you
have some actual gameplay for when to best sell your goods if you can't sell
them locally.

The companion to this, of course, is the import market: raw materials and
other goods (including flubbles) are _always_ available on this market,
albeit for higher prices than are typically found locally.  This sets an
effective upper bound on what a local merchant can charge for a good, since
a customer can always go to this import market to buy instead, but at least
players will never be shut out from buying something they need.  With the
same sorts of seasonal and event-based price changes (whenever you see crows
flying south, you know the import price of fellweed is going to go up),
players can easily dabble in a form of futures trading without a
sophisticated stock market on hand.  

Mike Sellers
Online Alchemy