The Ecto Issue: My thoughts (Economics involved)

Good point, but not necessarily true. Simple laws of Supply and Demand can't be ignored here - if the demand is greater than the supply, price will increase to an equilibrium point. Essentially what you're saying is that supply will always increase, which is generally true but can be limited. World of Warcraft, for example, has items that are available continuously through PvE, but only from rare bosses that spawn infrequently. In other words, there is a practical limit to how much an item can be farmed, and how this limit is determined determines the extent to which this rule holds true.

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Also, to clear up this ridiculous supply-demand debate:
Supply is defined as the quantity of a good available. Demand is defined as the consumer desire for a good. If price decreases, more people are willing to buy a good. If price decreases, less people are willing to buy that good. Consequently, lowering price increases demand and raising price decreases demand. Furthermore, if supply increases, suppliers lower prices to increase the demand in order to find buyers for all of their product. If supply decreases, suppliers will increase their prices to the point where the number of people willing to pay the new price is sufficient to sell all of their product. The point at which supply = demand is called the equilibrium point.

Clearly, increasing supply decreases prices and increasing demand increases prices, and vice versa. This can be demonstrated a simple economics graph called the supply/demand curve, as illustrated in the earlier-linked Wikipedia page. The y-axis represents price and the x-axis represents quantity sold. The point at which the supply (blue) curve and demand (red) curve intersect is the equilibrium point. The point directly below it on the x-axis represents the total quantity sold, and the point directly to the left on the y-axis represents the price per unit. As supply increases, the entire supply curve moves to the right. As you can see, this causes the point at which it intersects the red curve to move down and to the right, showing an increase in sales and a decrease in price (as sellers lower price to sell more units). An increase in demand will cause the red curve to shift to the right, causing an increase in price and units sold (as suppliers produce additional units to meet the demand and raise prices to capitalize on it.) Should supply or demand decrease, the respective curve shifts left, resulting in an opposite occurrence.

In other words, supply and demand are not independent of one another, it's important to understand what a graph means before trying to interpret it, and, of course, economics actually works. In the case of the ecto market, demand is fairly stable, as demand for ectos as a trade medium and for new players' armor balances well with the decrease in demand from players who have recently acquired their armor. However, with the advent of Ursan and PvE-based Favor of the Gods, the ecto supply is very large and as players are joining in the Ursan UW frenzy faster than players are leaving it, the supply is continuously growing larger. Eventually the ecto market will hit a point where players decide ectos are not profitable enough to farm quite so heavily and the supply will decrease to an equilibrium point with the demand, but I do not believe we have yet reached that point. (The hallmark of approaching an equilibrium price is constant fluctuation in the number of farmers as small changes in price trigger players to join or leave the market.)

Australia's been hurting itself plenty, thanks, what with your self-inflicted rabbit problems, and your insistence on maintaining sheep on land that simply can't support it ecologically.

The reason for the current ectoplasm prices in my opinion is

1. The free Uw and Fow access weekend (the price before the weekend was something like 6k to buy and after 4.5)

2. Ursanway (the ability to conquer almost anything with ease and speed)

3. The SS/LB favor spam weekend (now we pretty much have free access until gw 2 comes out :P)

They should reset ecto prices to 1gp in the rare material trader person..

People will cry so much and I will laugh so much.

Ectos were overpriced to 10-12k because they were used by cash farmers to store extra money after reaching 1M cap, in the period when there was no loot scale.

In those days, it was possible to consistently farm for 15k-20k per hour, zoning to an area killing everything and getting for each killed foe 100g or a white/blue junk with the same value.

This type of farming produced essentially cash, and those farmers needed to store the extra cash after 1M, so they used to buy ectos from traders and prices raised.

With loot scale that large influx of cash has been eliminated, so there's currently no need to buy ectos to store extra cash, simply because that extra cash is not obtainable.

So, before loot scale ecto prices were heavily influenced by this "special" use, after loot scale that use disappeared and so current prices are "clean", in the sense that they reflect the real supply/demand situation.

you forget that we got uw/fow scrolls too so favor isn't even needed at all

I remember reading in an interview waaaay back, that the minimum and maximum trader prices are fixed by Arenanet. Even if you sold 1.000.000.000.000 ectos the price would not drop below a certain threshold. Vice versa, items will now rather go out of stock than rising the price to infinity.

There were problems in the long forgotten (pre-Factions) past involving the color black and its price, as well as attempts to push red dye to weird heights. In the grand scheme of things price speculation as a means to gain profits has been nerfed. The laws of free economy do not really apply here. Ever since the Faction release we could see that Amber and Jade have a fixed range between 1.2k and 200g. Most items seem to have approached the lowest possible value of their fixed range.

I wish they would just remove stupid ectoplasm. So many people seem to be obssesed with them, not to mention like 987645 threads made with "ecto" in their name. Seriously people, get over it.

Ecto price has declined slightly due to a few key factors:

As the demand for fow armor has decreased, so has the demand for ectos.
This has led to more stable ecto prizes (less variation/ fluctuation: i remember a time that ecto prices would repetedly fluctuate over one day smotimes by as much as 1k, making ecto trading highly lucrative).

Stable ecto prices has affected the ecto trading market. There is less money to be made by trading ectos. As a result ecto traders (read: ecto hoarders) are dumping large amount of ectos at the reare materials trader.

Ecto prices are not affected by player to player trades. Only by player to npc trades.

Thus the low price of ectos is a direct result of ecto dumping at the materials trader.

Why? Guild wars is not just a vertual economy. Some players (try) to make a living by selling gw gold on the internet. Ecto hoarding was popular as a means of creating reserves. With the decling demand for fow armor and de steady decrease in active guild wars players demand for gold has decreased.

Hoarders (read: gold trader) are therefore dumping ectos in large amounts at the material traders so they can sell all they'r gw gold before the economy collapses; which in my opinion will be within one year coinciding with the release of guild wars 2!

So there you have it.

Ecto price has declined slightly due to a few key factors:

As the demand for fow armor has decreased, so has the demand for ectos.
This has led to more stable ecto prizes (less variation/ fluctuation: i remember a time that ecto prices would repetedly fluctuate over one day smotimes by as much as 1k, making ecto trading highly lucrative).

Stable ecto prices has affected the ecto trading market. There is less money to be made by trading ectos. As a result ecto traders (read: ecto hoarders) are dumping large amount of ectos at the reare materials trader.

Ecto prices are not affected by player to player trades. Only by player to npc trades.

Thus the low price of ectos is a direct result of ecto dumping at the materials trader.

Why? Guild wars is not just a vertual economy. Some players (try) to make a living by selling gw gold on the internet. Ecto hoarding was popular as a means of creating reserves. With the decling demand for fow armor and de steady decrease in active guild wars players demand for gold has decreased.

Hoarders (read: gold trader) are therefore dumping ectos in large amounts at the material traders so they can sell all they'r gw gold before the economy collapses; which in my opinion will be within one year coinciding with the release of guild wars 2!

So there you have it.

Funny thread so far, liked it.

While supply and demand explain something about the ecto price, it's not all.
Ecto's used to be THE shadow currency of guild wars.
Every trade above and some below 100K were filled up with ectos.
Even now Armbraces are sold at 100K+xx ecto.
The usage of ecto for FoW armor is only a very small part of the total use.

To use an item as shadow currency it must have a relatively stable price.
I have no doubt the (power)traders in the game have their influence on the value of ectos.
If the price is high it's time to cash and if prices are low it's time to stash.
This mechanism also keeps the price between a high and a low price.

The decline of the ecto price started a long time ago.
There have been several events that had influence on the market.
The most important ones would have been (without the introduction of the traders):
- 100% chance of salvaging the mod of a weapon/loot armor
This one had a large influence on the prices of upgrades and thus perfect weapons
- Introduction of Hard Mode + Loot scaling
Max rare skins became more accessible and loot scaling caused players to have less spending power.
- Rare skins drop in Sorrow's (purples) and EotN

I think those changes are the ones that influenced the upper end of the market most and pulled the price of ectos down.
This made them look for other valuable, more fixed-priced items to use as currency (Armbrace, now also killed as stable currency), bringing more ectos on the market.

What I observe in the game is that there is only a small high-end market left.
The influence of human traders on the ecto price has lowered and the price is now much more influenced by the regular players.
Someone stated earlier that it's possible to farm 15-20k/hour.
That would be roughly 3-4 ecto's at the current price.
If the drop rate of ecto/hour is higher, expect lower prices in the future.
If the drop rate of ecto/hour is lower, expect higher prices in the future.

Now we have one problem, also mentioned by Isildorbiafra.
There are players who still have loads of ectos stashed and there are only two uses besides shadow currency. FoW and Chaos Gloves.
This might disrupt the market but I do hope those players are sensible enough to understand that dumping ectos and thereby trashing the price does not make sense if the ecto/hour ratio compared to the gold/hour ratio is in balance.

But then, people do stupid things, I still don't get it that people play DoA for profit while the gold/hour ratio at the current Armbrace price does not really justify it anymore. Or they must be terrible farmers.

I solofarm 1 or 2 times a day UW. Two days ago coming back to my GH I went to the rare merchant to check the ecto price & sold the 3 i got at 4.1k each. Checking the buying price which was 3.8k.....I was UNABLE to buy ONE.

No ecto was available!!!!!!!!

WHY ???????????????????????????? I had sold 3 few seconds before. Is there any shortage of ecto?

It seems like ANET is making " rain & sun " imo....so the blablablas from the economical theories make me laugh folks!

Well you're wrong about both #1 and #2, even though chaos gloves require 75 ecto fow needs 105 and has been around for forever. Most people who don't already have fow get it before the gloves anyway and the need for ecto as a means of trade exceeds it's need for chaos gloves. And as for 2, well america has always had favour only to lose it a couple times and not for long anyway and seeing as scrolls cost as much as the entrance fee favour doesn't really matter anyway.

about the #1, most people with chaos gloves also have fow armor, so the their demand would be like 180e+? it still increased demand anyway you look at it (although im not completely sure what you were getting at)

Quoted, because it's the one thing in here that isn't /fail.

Seriously people, ecto has been relatively stable in price since EoTN came out (vendor sell price between 4.4k and 5.5k).

/violin

First of all the i dont believe the ecto economy is a " perfect " market at all... Therefor the rules of a supply vs. demand equilibrium does not hold so precise that why the prices fluctuate a bit... The small increases and decreases of the commodoty seem to support this theory..

Also HUGE amounts of ecto's are being held by relatively few players.. and thus they are able to influence the price! again supports theory of the non perfect market..

greetings Hugo

I Honestly think it is due to the dupers.

in the june period of last year i noticed that ectos had droped oncasionally to 6k from 7-8k if i remember correctly. then in august we hear about the dupers how they had been around for a few months. So they could easily have duped ectos and sold them to vendor because its faster and easier and since they can dupe more there wer'nt at a loss.

Traders then had a huge supply of ectos.

just my view/tought on it i may be completly wrong but its still an opinion.

u got it backwards,
if there are 5 peoples selling 1 apple each and only 1 buyer,each of the seller wil keep decreasing its price till the merchandise is sold.Now if u got 1 people who is selling 1 apple and u got 5 people wanting to buy 1 apple each than u increase the price because they all want it.So when demand gets high prices get higher,when suply gets high prices lower

I believe there is a line for each material. With the double Kurzick/Luxon weekend I bought some jadeite shards as I noticed the price was very low at 100g a piece in the list, but when I requested, he wanted 200g for one. You can see this with monstrous eyes too if I'm not mistaken. They're priced 100g but you pay 200g a piece. That leads to another question: Does Anet increase or decrease lines at times?

@OP: Basic law of economics: When supply increases, the price goes down. When the demand goes up, the price goes up too.

It is funny how many people complain about those with ectos.

Anyway anet fixes the prices, and they fluctuate from 4.8-5.5 on a regular basis, i doubt they are going to permanetnly drop more. If you need to store money and are worried about it, buy lockpicks.

Exactly, in the last year, you will almost never see the price be anything other than 4.9K or 5.5K at the vendor. There are rare occasions when it was a different value, but it's very brief. It's been steady for at least a year. So no, ectos aren't going down, they aren't going up. I too believe Anet has fixed the prices or they wouldn't always be those 2 values.

I find it interesting while reading this thread that people are either not seeing or not commenting on the fact that Anet do NOT need to fix rare material prices at the traders. They control drop rates of every material from every mob in every area. They don't need the added redundancy of price fixing. If prices of a material are changing rapidly or if attempts are being made to manipulate prices, drop rates of said material can be altered on a sliding scale to restore equilibrium.

lol some schools of economics, would say that if real prices of goods were dropping, the economy is in fine condition

and if Real prices started increasing, well, part of the definition of recession is then satisfied.

Despite ArenaNets ability to somewhat dictate the market, consumer and supplier reactions can always be mapped to that of economic schools of thought - be it in game or in life.

But that's completely irrelevant. Most of the people harping on about supply and demand in this thread are completely wrong anyway, and to be honest anyone who's taken economics or looked into it for more than 2 weeks should be able to see that.

ectos make me happy...

Easy supply, and no reason to expend. Econ 101. When a price falls demand rises. When agregate supply rises, agregate demand also rises. how do you fix it?... Let it fix itself. It always works out eventually to get back to Y*

ecto does not fit into the standard supply and demand model because it is used as a form of currency rather than just a commodity. As such the price of ecto is kept artificially higher due to most trades being conducted away from the rare material trader and people hoarding much more than they could ever want to use in a commodity format.

This means you need to look more at a currency relative value model and mix that with a supply and demand model to get a better economic picture of it.

any lower and people will start jumping out the window