JimmyPopPopcorn Posted March 28, 2013 Posted March 28, 2013 Why is the GTN taking a cut of my profits? It's not like the money actually goes anywhere. Bioware?
atschai Posted March 28, 2013 Posted March 28, 2013 It makes sense when you think that it stops powersellers by discouraging people from reselling stuff at a slightly higher price and keeping the economy in check by removing money out of the system. Also, its run by the Hutts so what do you expect.
Pscyon Posted March 28, 2013 Posted March 28, 2013 Credit sink. It's to take money out of circulation. Why it takes the spesific amount it does (6%) isn't quite as clear.
TheBBP Posted March 28, 2013 Posted March 28, 2013 (edited) Why is the GTN taking a cut of my profits? It's not like the money actually goes anywhere. Bioware? The tax is there to cover the essential public services supplied by the Republic/Empire. Things like: High-level NPC guards for faction strongholds. Priority Transports.Air traffic control for the landing and departure of your ship. Docking fees for your ship.Taxi Service.Government building maintenance.Class Trainers... The list goes on, but please feel assured that your tax is being put to good use. Edited March 28, 2013 by TheBBP
AmericanFear Posted March 28, 2013 Posted March 28, 2013 (edited) That;s an interesting question. I'm not sure that it really discourages "powerselling" as much as it just inflates the price of everything by the amount of the tax. Much like how taxes work in the real world, no one party assumes 100% of the tax. A seller may 'eat' some of the tax but a portion of it will directly lead to higher prices thereby putting some of the weight of the tax onto the buyer. Having had very little interaction with the GTN i can speak only in theory but this is something I would like to examine closer. Edited March 28, 2013 by AmericanFear
AmericanFear Posted March 28, 2013 Posted March 28, 2013 Government always takes its cut. yes but in this case who is the government? surely bioware is not worried about it's balance of in-game credits so are they simply trying to simulate a tax? I would really like to dive deeper into both what the intention of this tax is, and what the actual effect is.
Andryah Posted March 28, 2013 Posted March 28, 2013 (edited) That;s an interesting question. I'm not sure that it really discourages "powerselling" as much as it just inflates the price of everything by the amount of the tax. Much like how taxes work in the real world, no one party assumes 100% of the tax. A seller may 'eat' some of the tax but a portion of it will directly lead to higher prices thereby putting some of the weight of the tax onto the buyer. Having had very little interaction with the GTN i can speak only in theory but this is something I would like to examine closer. I consider myself a power seller on the GTN. No it does not discourage power selling IMO. It also does not encourage price hiking... at least not for me. I buy/sell the GTN as a minigame. I look for profit margins in my transactions. The GTN fee is simply the price of doing business in an open market. I don't add 6% to my list prices to offset the fee. Compared to some other MMOs... the 6% is modest IMO. I use the GTN to my advantage, so I expect to pay a fee for the advantage that gives me. Transaction fees of all kinds in MMOs are designed to modestly take currency out of the economy. It's a deflationary move, and in most MMOs it's not actually enough to offset the influx of currencty the game provides the player base. No segment of the economy should be exempt IMO. Edited March 28, 2013 by Andryah
Andryah Posted March 28, 2013 Posted March 28, 2013 (edited) yes but in this case who is the government? surely bioware is not worried about it's balance of in-game credits so are they simply trying to simulate a tax? I would really like to dive deeper into both what the intention of this tax is, and what the actual effect is. you have to drain money out of an MMO or you get runaway inflation. Even with money sinks.. inflation still takes over in the long run. Look inside any 5 year old MMO and compare it to when it launched. Inflation will be rampant in that 5th year compared to launch. So basically, in game currency sinks defray some inflationary pressures, but do not eliminate them. Edited March 28, 2013 by Andryah
DarkDajin Posted March 28, 2013 Posted March 28, 2013 (edited) I consider myself a power seller on the GTN. No it does not discourage power selling IMO. It also does not encourage price hiking... at least not for me. I buy/sell the GTN as a minigame. I look for profit margins in my transactions. The GTN fee is simply the price of doing business in an open market. I don't add 6% to my list prices to offset the fee. Does it stop you from buying out people who undercut you with 1% of the price? That's the only thing it does for me.. Edited March 28, 2013 by DarkDajin
AmericanFear Posted March 28, 2013 Posted March 28, 2013 (edited) I consider myself a power seller on the GTN. No it does not discourage power selling IMO. It also does not encourage price hiking... at least not for me. I buy/sell the GTN as a minigame. I look for profit margins in my transactions. The GTN fee is simply the price of doing business in an open market. I don't add 6% to my list prices to offset the fee. Compared to some other MMOs... the 6% is modest IMO. I use the GTN to my advantage, so I expect to pay a fee for the advantage that gives me. Transaction fees of all kinds in MMOs are designed to modestly take currency out of the economy. It's a deflationary move, and in most MMOs it's not actually enough to offset the influx of currencty the game provides the player base. No segment of the economy should be exempt IMO. I should mention I have my degree in economics so this topic has really peaked my interest: Typically (in the simplest terms) a new 6% tax means the seller charges 3% more and his profits are decreased by 3%. In other words, he pays half the tax and passes on the other half to the buyer. Now, this can only happen if the market allows it. If another seller chooses to keep his price consistent, his profits will decrease by 6% but he will be more competitive because he will be able to charge a lower price than the previous seller who raised his price, thereby pricing the 1st seller out of the market. An economy tends to move towards the latter in a highly competive market in which there are many sellers, like there is in the GTN. (Just to round out the economic theory, incase anyone cares): In a market where there is few sellers, such as a monoply, the opposite will happen. Because the seller has more control over the price, they are more likely to raise the price by 6% so that their profits are unaffected. TL;DR: So if the seller, in an effort to keep prices as low as possible, assumes the entire tax, he still must make sure his profit margin is greater than the cost of the tax or else he will be operating at a loss. Therefore; if the seller previous to the tax is already seeing profit margins greater than the cost of the tax, he doesn't need to do anything. But if the profit margin previous to the tax is 6% or less, the seller will have no choice but to raise the price. In the case of the GTN where the tax is already in effect, the seller may not be actively making this decision because the market is making it for you. Without the tax, I think it is safe to say you would experience both lower prices and higher profits. I suppose that this would act as a deflationary pressure by removing currency from circulation, i'll need to think about the effects of that further... I know there has been at least one paper that;s been published recently on the economies of MMOs, I should try and dig one up... Edited March 28, 2013 by AmericanFear
OddballEasyEight Posted March 28, 2013 Posted March 28, 2013 The tax is there to cover the essential public services supplied by the Republic/Empire. Things like: High-level NPC guards for faction strongholds. Priority Transports.Air traffic control for the landing and departure of your ship. Docking fees for your ship.Taxi Service.Government building maintenance.Class Trainers... The list goes on, but please feel assured that your tax is being put to good use. Brilliant response
Hyfy Posted March 28, 2013 Posted March 28, 2013 yes but in this case who is the government? surely bioware is not worried about it's balance of in-game credits so are they simply trying to simulate a tax? I would really like to dive deeper into both what the intention of this tax is, and what the actual effect is. I suppose you could look at it like a tax so to speak, really though its just a credit sink to try and take some money out of the in game economy to hell keep inflation down is all really.
Hyfy Posted March 28, 2013 Posted March 28, 2013 I should mention I have my degree in economics so this topic has really peaked my interest: Typically (in the simplest terms) a new 6% tax means the seller charges 3% more and his profits are decreased by 3%. In other words, he pays half the tax and passes on the other half to the buyer. Now, this can only happen if the market allows it. If another seller chooses to keep his price consistent, his profits will decrease by 6% but he will be more competitive because he will be able to charge a lower price than the previous seller who raised his price, thereby pricing the 1st seller out of the market. An economy tends to move towards the latter in a highly competive market in which there are many sellers, like there is in the GTN. (Just to round out the economic theory, incase anyone cares): In a market where there is few sellers, such as a monoply, the opposite will happen. Because the seller has more control over the price, they are more likely to raise the price by 6% so that their profits are unaffected. TL;DR: So if the seller, in an effort to keep prices as low as possible, assumes the entire tax, he still must make sure his profit margin is greater than the cost of the tax or else he will be operating at a loss. Therefore; if the seller previous to the tax is already seeing profit margins greater than the cost of the tax, he doesn't need to do anything. But if the profit margin previous to the tax is 6% or less, the seller will have no choice but to raise the price. In the case of the GTN where the tax is already in effect, the seller may not be actively making this decision because the market is making it for you. Without the tax, I think it is safe to say you would experience both lower prices and higher profits. I suppose that this would act as a deflationary pressure by removing currency from circulation, i'll need to think about the effects of that further... I know there has been at least one paper that;s been published recently on the economies of MMOs, I should try and dig one up... Your TL;DR is nearly as long as the part that was "too long".
DaRoamer Posted March 28, 2013 Posted March 28, 2013 I should mention I have my degree in economics so this topic has really peaked my interest: Certainly isn't a degree in English, the word is "piqued" just teasing
AmericanFear Posted March 28, 2013 Posted March 28, 2013 (edited) Your TL;DR is nearly as long as the part that was "too long". yes but it's the part that actually matters, well, relative to the rest of the post Certainly isn't a degree in English, the word is "piqued" just teasing I had a feeling I was using that wrong... haha Edited March 28, 2013 by AmericanFear
Docmal Posted March 28, 2013 Posted March 28, 2013 It always amazes me how basic economics escapes the majority of people. The simple answer is that the tax is a credit sink. If you want to understand a credit sink keep reading. Credits are created out of thin air everytime a player is rewarded with them. This will inflate the total amount of credits in the game. In order to control the rate of this inflation the total amount of credits in the system must decrease by some action. This action is refered to as a credit sink. Inflation in the game economy is bad for a several reasons of which I will explain a couple. The first is that the prices decided by the devs for things like skill purchases, repairs, stims, etc. will remain fixed and not grow with inflation. Their usefullness will remain the same to the player but the cost with respect to a player's total credit balance will go down. This has the capability of invalidating a developers designed system. Next, the rewards given by the devs for certain actions can become less attractive as the total money supply increases. This removes the carrot the developer put in place to make certain actions desirable. For example a quest that rewards 100 credits is popular when the average player has 500 credits but becomes a waste of time when the average player has 50,000 credits. There are many other reasons that inflation is bad but one truth holds true: As the money supply increases (inflation) each credit you hold is worth less in the marketplace.
Pscyon Posted March 28, 2013 Posted March 28, 2013 add 6% to my list prices to offset the fee. ... why has doing that not occured to me. Gyah. Ah well, will from now on
JMCH Posted March 28, 2013 Posted March 28, 2013 This tax is not relevant anymore. Initially, it was there to discourage massive overpricing, but for whatever reason that changed radically about when CM went live, to the point they're now ridiculously low. The reason probably had to do with the fact some items have a wrong "base" value, but lowering the tax to what it is now, without any change whatever your pricetag, was totally stupid.
Hyfy Posted March 28, 2013 Posted March 28, 2013 yes but it's the part that actually matters, well, relative to the rest of the post I had a feeling I was using that wrong... haha Just for the record I wasn't knocking you for it, just found it amusing is all.
Malastare Posted March 28, 2013 Posted March 28, 2013 That;s an interesting question. I'm not sure that it really discourages "powerselling" as much as it just inflates the price of everything by the amount of the tax. I'm not sure that "powerselling" is the correct price, but it does act as a simple barrier for some of the more simpleminded abuses of the GTN, namely the creation of cartels. This was covered a long time ago. Imagine a situation where a group of players buy every single item of a particular type (example: Krayt Dragon Pearls) and decide to sell them back at extreme prices (eg: 40k per pearl). In that market, anyone trying to sell pearls at 20k gets an easy sale as the pearl-cartel buys it up. Those wanting to buy, however, are stuck: The cartel can lock the price at 40k and no one can do anything about it except hope that they can sneak in a purchase before the cartel. In a market with no fees, this can go on indefinitely, with very little risk to the cartel (so long as the price is not prohibitively high... but even then, they have complete control over the price, so, there is nothing stopping them from lowering it). As soon as you put in fees, you open the door to downward pressure on prices. Someone can put up a Pearl for 39k. At that price, the fee for selling the pearl at 40k doesn't cover the price difference. The cartel needs to decide whether its worth losing money on the transaction just to retain price controls. The situation becomes unstable, as the cartel is pressured to lower their price to match or risk making less profit than the people selling at the lower price. Even without the cartel idea, the situation still works, and at the same time, it prevent low-profit cash farming. While I have happily bought drastically underpriced items to sell back at normal prices (Still holding onto my Classic Phantom chest piece I bought for 18k!) there is no incentive to simply buy items and sell them back at mildly inflated prices. Example: If I see some armor being sold for 100k, I can't make a profit unless I think I can sell it to someone else for more than 106k. I have to be able to sell it for something more like 110k to make a worth-while profit. Meanwhile, someone selling it for 104k is going to be far more likely to get the sale than I am. TLDR: The fee stabilizes the market by keeping the door open for undercutting prices and preventing small-price-bump cash farming.
SWGEvictee Posted March 28, 2013 Posted March 28, 2013 yes but in this case who is the government? surely bioware is not worried about it's balance of in-game credits so are they simply trying to simulate a tax? I would really like to dive deeper into both what the intention of this tax is, and what the actual effect is. Roleplay wise the Hutts run the market. The 6% is their cut to line their own pockets. Real world it's a credit sink and nothing else.
Zsavooz Posted March 28, 2013 Posted March 28, 2013 I'm not sure that "powerselling" is the correct price, but it does act as a simple barrier for some of the more simpleminded abuses of the GTN, namely the creation of cartels. This was covered a long time ago. Imagine a situation where a group of players buy every single item of a particular type (example: Krayt Dragon Pearls) and decide to sell them back at extreme prices (eg: 40k per pearl). In that market, anyone trying to sell pearls at 20k gets an easy sale as the pearl-cartel buys it up. Those wanting to buy, however, are stuck: The cartel can lock the price at 40k and no one can do anything about it except hope that they can sneak in a purchase before the cartel. In a market with no fees, this can go on indefinitely, with very little risk to the cartel (so long as the price is not prohibitively high... but even then, they have complete control over the price, so, there is nothing stopping them from lowering it). As soon as you put in fees, you open the door to downward pressure on prices. Someone can put up a Pearl for 39k. At that price, the fee for selling the pearl at 40k doesn't cover the price difference. The cartel needs to decide whether its worth losing money on the transaction just to retain price controls. The situation becomes unstable, as the cartel is pressured to lower their price to match or risk making less profit than the people selling at the lower price. Even without the cartel idea, the situation still works, and at the same time, it prevent low-profit cash farming. While I have happily bought drastically underpriced items to sell back at normal prices (Still holding onto my Classic Phantom chest piece I bought for 18k!) there is no incentive to simply buy items and sell them back at mildly inflated prices. Example: If I see some armor being sold for 100k, I can't make a profit unless I think I can sell it to someone else for more than 106k. I have to be able to sell it for something more like 110k to make a worth-while profit. Meanwhile, someone selling it for 104k is going to be far more likely to get the sale than I am. TLDR: The fee stabilizes the market by keeping the door open for undercutting prices and preventing small-price-bump cash farming. that's a pretty astute observation and one so far as I can grasp this makes the most sense.
Spartanik Posted March 28, 2013 Posted March 28, 2013 The tax is there to cover the essential public services supplied by the Republic/Empire. Things like: High-level NPC guards for faction strongholds. Priority Transports.Air traffic control for the landing and departure of your ship. Docking fees for your ship.Taxi Service.Government building maintenance.Class Trainers... The list goes on, but please feel assured that your tax is being put to good use. Yet doesnt pay for health care, i feel cheated. They are abusing the tax payer without us getting any real benefit for it at the social level.
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