My take is this. For some PLEX can be seen as “very expensive” these people do not value the game time at that degree of ISK which represents, at least in part, a time commitment. That is, these players grind for ISK to PLEX and that burden has gotten “too large” relative to their subjective value of game time.
However, for others this is not the case. Everyone selling PLEX would disagree with this assessment. Example, @yellow_parasol.
My “Econ101” argument is that Salvos’ arguments are invalid in that they have hidden assumptions where the conclusions are nothing more than the assumptions themselves.
Namely: Assume people are buying PLEX to obtain a fixed amount of ISK. Therefore they buy less PLEX as the price goes up. Of course this is true.
However, people may be doing:
- Buying PLEX to obtain a fixed amount of PLEX.
- Buying a fixed RL currency amount of PLEX.
- Buying PLEX at the higher in game price where at a lower price they would not be buying.
- Some combination of 1, 2, and 3.
Given that the forge has about 1.5 million PLEX on the market and has had pretty much the same amount of PLEX on the market for the last 12 months…I’m going to guess 4 is most likely correct.
Further, Salvos seems confused about why prices change. The price changes because either supply or demand increases. But what is the supply curve? It is the locus of points representing price-quantity pairs of PLEX various people are willing to provide in game. It looks like this:
Note that as the price increases we move along the supply curve moving upwards–i.e. from left-to-right. As the price increases we see supply increase.
We can also add the demand to that graph to get,
So how can we move along the supply curve where the supply goes down? We have to shift the demand curve.
Typically a demand curve is written as,
Where p is the price, y is income, and alpha is a vector of prices that represent things like tastes/preferences and also other prices, say for compliments and substitutes. To shift the demand curve in the above graph we have to change either, y, or an element of alpha. Those are typically referred to as shift parameters.
Getting really into the nitty gritty here…
Note that the graph is only in the (p,q) space which is really just the positive quadrant of the the space R^2–i.e. a two dimensional space where each dimension is comprised of real numbers. In other words, the graphs, as they are typically shown suppress the dimension regarding income and the dimensions regarding taste/preferences and other prices. Typically a demand function would exist in an n-dimensional space. Now asking me to “draw” such a demand curve is not possible as at most we can kinda-sort fake drawing a three dimensional space (paper, computer screens, black boards, etc. are 2-dimensional spaces). So don’t even bother asking. I can’t. This is also why we have things like multivariate calculus…so that we can handle n-dimensional cases without having to draw them.
So, back to the issue. We want to move along the supply curve such that the quantity supplied decreases. To do so we must shift the demand curve thusly,
But this does not work for Salvos as the price goes up. And we can’t shift the demand outwards because then the quantity goes up. The only way for price to go up and quantity to go down is to shift the supply curve inwards, but that would mean that either income went down, or some other factor other than price changed like tastes, the price of substitutes, etc. But we have seen nothing here to believe that.
In fact, Salvos wants to argue that the price increases is shifting the supply function, IMO, and that is not what is happening. Changing the price moves us along the supply curve it does not move the supply curve.
There is, as far as I can see, no way to make the concepts of supply and demand work in such a way as to fit Salvos’ story. None.