Does SC manipulate product prices?

In the hunt for answers to why some of my corps produce a thundering deficit while others do OK (at same salary and quality settings plus hiring etc), I sort of went 'hummm!?' after having checked the pricehistory of several products.

What makes me wonder is the numerous products where the price fluctuations follow a fixed pattern all the time.

AND what's more: it's a linear decline/increase even over several months. Check defensive fortifications for example.

This COULD ofc. happen naturally. But for several products and persistently over time? Hardly.

Also, the pricefluctuations do not really match the history of market surplus/deficit.

Effects of quality do to some extend obscure the real price of commodities, but I can't imagine that the average quality of a commodity on the world market would fluctuate that much (especially increasing quality takes much more time).

So my question is: am I overlooking something or is this very unlikely pricehistory in fact a result of SC somehow forcing the prices up and down - regardless of actual supply/demand - for gamebalance purposes?

I think a far longer term of price history needs to be studied to make any sense of what you are seeing.

A lot of things here are cyclic. You will, over years, see the effects of supply and demand, so assuming a theoretical constant average level of price you can picture it as a guitar string having been set vibrating (albeit slowly) from peak to trough. Now even the purest note will have harmonics, secondary vibrations upon the main one, and this is the 2 - 3 month rise and fall evident on the graphs of short term history.

You will find this phenomenon in most digital processing as you cannot replicate a true analogue stream. I would say that this is the reason for what you observe, it is something of a pet subject for me having studied computer control and engineering in uni. In fact this DAC/ADC problem was the main focus of my project for my finals. That also explains why you may often see me mumbling about 'damping' in the game algorithms.

Hope I explained my theory clearly, and does it seem reasonable to you? nice to meet someone who is looking at it like you apparently are.

Crafty.

I had brought this up earlier and was told that when a product reaches its GM set Price cap it goes in that pattern until the price is bellow cap...

I can follow prices, they appear very consistent with supply and demand. There is exception with low caps however in which demand stops influencing price past a certain period. I feel that level is far to low and the market price should be much more volitile when it dipps into levels of shortages that do exist, but what can you do. I've complained consistently about output being to small compared to input and so many corps actually accumulates more resources then the create. <- Depends on the president of course. But the GO's DO manipulate prices against supply and demand but it isn't conventially it is when they lower outputs inconsistently with the market for no reason without telling us why.

Thanks everyone. You make sense (most of it, hah!) and it's nice to know that I'm not the only one who seems to have spotted some level of market distortion.

Crafty, I realise that a longer term perspective should be applied to truely judge the markets' ability to adapt. Otoh if a truely free market ecocnomy was used as a model, longterm shortages (like in years) as one could see here, should not go by without a noticeable priceadjustment so that an equilibrium is in fact reached.

(Q: is there no way to adjust the numeric and time scales on the various graphs?)

I joined about 7(?)years ago (and rage-quit when the game was suddenly made premium in the middle of everything) and it seems that some of the same goods are still in deficit as then (such as services and aircraft fuel). It tells me that SC isn't following a true market economy.

I can imagine that the majority of players would probably hiss and whine if prices were actually adapting much faster. It could make corporations go from profitable to wash-out in 6 months or a year. But hey! That's also a realistic IRL issue.

Btw., Crafty, we share an interest in this subject, but from two different views, I think. I have a master in economics, so it's more the simulation of an economy that irks me than the design of a comouterized simulation.

But it ofc. boils down to the same thing in the end because computerized models of economy are all about creating convergence. For the record, economic models for professional use also fail a lot ;)

I like the way that if there is a large surge of supply, like someone dumping product on the market, then it triggers a mass closure of those corps, according to the pop-up numbers anyway. Presumably these are C3 corps.

But, the funny thing is the supply never drops to the extent that the loss of output of that many corps should dictate.

Many things make no common sense here, it sometimes seems pointless trying to work it out. But maybe that's what keeps me interested. If it were cut and dried, lots of us would have the whole game cracked. That would be boring wouldn't it.

Yes, that would be boring.

But it's also a distrubing thought that the reason why we can't find any explanation is because there isn't one. If the code is a mess, noone knows why and all the GM can do is induct ressources and money into the game when its prices seem to fly off the handle.

This was explained many times in the past but probably not recently.
The price fluctuates with demand and supply. when it reaches the top or bottom,
the fluctuations are within a 4% range.

Changes per game month, based on supply and demand, are 3% max and when they pass the ceiling, there is a 4% correction in the next game month. if the shortage continues, they go up again by 3% and if ... etc.

same at the bottom.

This process causes the zigzag pricing at the top and bottom ranges for all products.

other than that, there are no GM price interventions.

Hey Andy If a product stays in the red for to long. Do you dump that product on the market to make up for the shortage?

Thanks for the comment Andy. I will quote it.

I have since my original post come to realise that the prices do - in general - adapt to the market.

If you like, you can read about my observations here:
https://blogs.simcountry.com/sbroccoli

(That article was previously posted but disappointingly got no attention)

HOWEVER, there is still a minor fraction of freak observations (oversupply combined with priceincrease etc.). So, obviously, what you describe doesn't happen in every case.

Is it true, what I speculate in that article, that the game adds 'noise' to the pricing structure? Or what else is at play here?

I'm wondering if the actual shortage or oversupply figures are the sole ones used for price determination. I think it may be more reliant on either the supply rising or falling or the demand rising and falling or some combination of the two. Not the simplistic over/under supply figure.

Why I say this is I have noticed that corps profit can vary largely from one month to another because of the price they get paid for their product. This happens with no change in quality or production or any other corp related factor. It also doesn't seem to be related to market price or the shortage/oversupply figure, but it does seem to have some relation to the actual supply figure, or maybe the actual demand figure, I haven't clarified it yet.

And you might want to note Andy's wording in his explanation above:

<!-Quote-!>Quote:

The price fluctuates with demand and supply.<!-/Quote-!>

which could imply from some combination of the two not the basic over/under figure.

Dunno, this is just speculation I have made from seeing corps income change dramatically from one month to the next with no apparent influence from any other parameter.

If you look into the break down of monthly profit, you will usually see, that the fluctuation is because of the use of raw materials (second to that is the selling price).

So what happens is that the input cost is a batch of products with seperate prices.

Occasionally all - or a majority - of the prices of this batch increase or decrease at the same time which results in a noteworthy change in profitability.

Remember, btw. that it's not the actual purchase, but just the calculated cost at market values.

I haven't looked into this, but it wouldn't surprise me that these batches have a tendency of creating big fluctuations. Simply because the mainstay of many corporations input center around the same goods (service and electricity for example). It means that a large part of the demand climbs/falls in the same ratio.

That doesn't make sense to me. A corp buys it's supplies at a certain price, as you can see from the supplies value graph, and then uses them. Surely the monthly cost of each supply is dependant on what the corp bought the supply for not the current market price. Supplies are paid for out of cash too, not a monthly deduction off of income though of course the cost each month is used to calculate the net profit.

If the current market price is used to value the costs of supplies used monthly, and hence the overall value of supplies in stock, then that is a funky way of doing it. If I catch a common product in great oversupply and so cheap then I buy a load of it at the low price to feed the corps. Does this mean that strategy is useless?

No because that is two different things.

One is cash flow - what you actually buy and sell things for. The other is the running profitability of the business you are running.
If the actual profitability was to calculate in every single bit of supply you bought from the day the game was made to now with all the historic prices...well, you can imagine.

I can't from a logical point of view see how it would be possible for the profit statement to be based on anything but the present market price.

This of course means that the profit statement you see in the corporations overview does not tell you exactly how much money you made on it. But then again, that's what you have the cash flow for.

The profit statement otoh is very good because it gives you an idea how good a business you are having in the longer run/in average. This would be almost hopeless from the cash flow alone.

You can also see it by comparing the cash flow graph with the profitability graph in a month where the corp bought supplies big time. Cash flow may swing while profitability doesn't.

This is my understanding of how it works.
But...I could be mistaken ofc. Prove me wrong, by all means!

All I'm saying is you have bought X amount of sausages for 5T a sausage. You have x in stock and have paid 5XT for them. Each month you use 1/2 a sausage so the cost of supplies should be 2.5T a month (for sausages alone).

If the market price of sausages goes up to 10T a sausage while you have some percentage of your X sausages left, why would that influence the cost to your corp of monthly sausage use? It should remain at 1/2 a sausage worth bought and in stock at 5T per, (2.5T) not rise to 1/2 a sausage worth at 10T per (5T).

Crafty's right. When you purchase something it is an accrued expense. This means your income statement isn't billed until you have used it. But you are right there is a cash flow statement, but you do realized accrued expenses are a contra account and so you have more assets in the form of Value os Supplies. This has 0 indication on your corps well being, If you say, bought a year supply of material one day let that be your expense then you will have one day of crushing losses and 11 months of amazing profits. That doesn't make any sense, you have assets, they aren't losses.

I mean I could be wrong, but I think this is how it works. You have Surplus-Nuetral-Shortage. If we reset everything to the base price, which you can find when you buy products directly, then if in surplus the price will fall relative to the base price, if even it will freeze, if shortage it will rise. The level of the surplus/shortage or even the level of how nuetral something is is irrelevant when tracking price changes. <- I'm not saying it isn't important. Anyyway you look at it the price change will be minor. So as the price changes it will become more profitable in corps with shortages and more costly for those in surplus. The following month this is repeated. If a product is in shortage it will fall again, and it doesn't matter if it's short 1T units or just 1, the price is based on whether or not it is in shortage or surplus.

The grey area involved in this situation have multiple facets and things I may not agree with neccessarily. I'm not positive of the exact value but when in shortage prices increase for each month it is in shortage but will stop at twice the price, and begin fluctuating 3% up then down then up etc. I think most products are in this loop. Now as SC has taken supply vs demand into their own hands, they no longer allow us a functional trade strategy option. For us to exasberate shortages. I feel this is problematic because the market will never have these items stabilize as there can be a lack of incentive building corps in deep shortages compared to others. If we were allowed to set the market price, you would see a much more stable system in which corps can really benefit from shortages and in time eliminate those shortages.

Another conflict with this is, the marketplace does not seem salvageable, the shortages far out weigh the surpluses, and because of that even if people built towards equilibrium we would never get there. I have advocated several times to increase output or decrease input to make it more realistic but it has fell on deaf ears.

I guess this situation can be improved a bit by SC taking in a larger influence on S&D changes making the prices different. Not that any of this stuff matters that much because shortages just don't fluctuate enough. Just find out what makes money and build it. Find it what supplies or cause you problems and think about ways around them, simple

I think we have a misunderstanding here.

What you guys are talking about, is what the real profit is. You are right that the real profit is the actual cost of input at the time of purchase, subtracted from the actual selling reveneue at the time of the selling.

What I'm saying is, however, that I think the 'profit' the game is displaying is the profit of selling minus buying if everything had been bought the same (current) month.

It should be easy to verify what is the case, if some GM would comment on this.

I just found this in the documentation.

I think it proves that cost is calculated per running month. Not per actual cost of the historic purchase.

---
These variations in cost of materials can make the corporate finance hard to understand. To make it easier to understand and more stable, we look at he materials used each month and take the value of the used materials as the cost of materials for the month. This is done independent of any purchase of materials on the market.

When materials are used, the value of all materials on stock is reduced, and the reduction in their value is in fact the cost of the materials used in that month.
----

That quote is ambiguous. "We look at the materials used each month and take the value of the used materials as the cost each month", to me that implies the value of materials in stock which should be the cost value. It could also possibly mean the current market value of a X x + b X y + Xz.

The independant of bought materials bit just means the cost of buying more supplies for stock is not influencing the monthly cost at all.

The last sentence in fact more confirms my thoughts than prove otherwise, unless anyone is seeing the value of all materials increase when any particular product or two increases in price a lot while your corp has plenty in stock.

So there is some cockney barrow-boy logic for you.

(pound of apples Mrs. Smith? lovely jubbly.
'ello Mrs. Jones, how's your Berts lumbago?)

This is hard to understand so my observation has taught me this way of doing things, but knowing how it really works isn't going to matter much:

K simple math for this. You buy 110 Q100 your Qis 100. You use 10 and buy 100 Q200. Your average Q is (100*100+100*200)/200=150. You do not have 100 Q100 anymore you have 200 Q150. The cost you pay works the same. It works as if you do in fact have 100 of each, and you pay to the average of those materials to the supply. So this in fact paying the price of the historic purchase. Well actually I don't really have any idea what you are taling about but... it is just accrual based accounting is all. If you are trying to say that supplies Q works the way I meantioned but costs are completely associated with current market value that is INCREDIBLY incorrect. You lose cash when you buy stuff! That cash isn't an expense until you use that stuff. The Q is the Q you bought the cost is the amount of money you spent, it really comes down to: Does it really matter that much when the cash that you already spent gets accounted for on your income statement?

Drew could be right. Maybe the game just keeps an average price for every stock purchased.

If it wasn't for the fuzz the quality creates in the actual pricing, it would be easy to check if one or the other is a fact.

Where's Andy when you need him?

Mr. Broccoli, I will tell you where Andrew is. He's checking his list and checking it twice, checking to see who's been naughty or nice.

Andrew can't answer all the questions! Where would the fun and challenge be if he gave you all the answers! Part of the challenge is figuring it out. Talking to others. Getting others' perspectives! Testing their methods with yours!

Please dun smack me! Crafty Cockney made me say this!

@ Crafty...... what in the heck is this?!
X x + b X y + Xz

That gives me a headache! I'm supposed to figure that out???!!! lol

And, isn't Drew smart? I'm so proud of him. He's going to make me millions one day and support me in my old age. *Hugs Drew SMILES

Oops, am I off topic again?!!! Sowwy. *looks sheepish

Of course it matters numb nuts. If you bought your corp supplies at $100 each and the market price then increases to $200 each as your corp is still using the $100 ones, then either your materials cost per month is calculated at the $100 price or the $200 price. For high Q producing hi-tech corps that could be close to $1B a month difference.

Now, I know you have multiple products so they are not all going to rise by 100% but the influence of just one could be significant, let alone two or more. You peeps that use ASQ must appreciate the significance of just one product.

Hypothetical situation used.

I feel like I am being totally ignored. :-(

Big X represents an arbitary number
little x represents an arbtary item

It's algebra 101 kiss.

Must admit I didnt format it quite right tho'.

Ok, I'll put in a good word with Andy for you by way of an apology ;) lol, as if he listens to me...