Thursday, April 4, 2013

Thoughts on Building an Economy

I don't think I have to start with a discussion of why standard D&D book prices and equipment lists are completely useless for someone looking for a fantasy version of Earth. Let's just take that assumption and move on.

The excellent simulation series Europa Universalis (EU) utilizes an economic system that I think would work well as a baseline to create a working economy for the EMP. In a nutshell, the game world is broken down into 1,700 or so provinces that all produce a type of good. Each good is also collected in a Center of Trade, which is a regional hub where "trade" takes place. Each good has a base price and is modified by supply and demand. The actual value of that good to the owner of the province is a function of taxation, production efficiency, and a fraction of the good's trade value.

There's a lot going on here and my description doesn't do it justice if you've never played the game. There are a number of core elements that really shine:

First, every good has a base price. While there have to be some arbitrary numbers used here, a good place to start to determine a functional and relatively accurate price can be found in a couple places. Every item in an equipment list can be expressed as a sum of base prices, so a sword is so many units of iron, so many units of labor, so many units of fuel, etc.

Second, every good has a global trade value. While I might make widgets here, they will eventually propagate out via trade. However, the trade value will not be the same as the base price: trade value takes into account which market you are trading into and how much of the good is present there. This allows us to have dynamic prices based on where the item is being bought and sold.

Third, the value of a good to the province owner is not directly transferred to the province owner. The good itself has no value until someone else comes along and buys it or trades for it. This allows us to correlate the trade value of the province with the overall wealth of the province. This fact can then be extrapolated to the quantity, value, and price of all goods present in a province.

So on the macro level, we can total up all the units of a particular good that are present in an economy. Then we divide out the amounts of that good to each province according to the wealth of that province. These factors then modify the base price of a unit of goods. The end result is that the price of any item is a function of its "intrinsic" value, the amount produced within the economy, and the wealth of the market.

I think this is fertile ground upon which to build a dynamic economy...

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