EVE General Discussion

In economic theory there is something called Giffen good (good, as in "goods and services"). These are goods which have a reversed supply-demand curve. That is, an increase in price results in a decrease in supply. It is possible that the PLEX is a Giffen good. To see how this could be, first let me recast what I mean by "the price of the PLEX".

Consider how much Real Money I need to buy, say, 10 billion ISK via PLEX. As the ISK value of the PLEX increases, the price, in Real Money, of 10 billion ISK decreases. Normally one would expect this to increase the demand for PLEX. As the Real Money cost of 10 billion ISK drops, more players will opt to make the purchase. But if the PLEX is a Giffen good, then the reverse happens. The mechanism may be:

The number of people who would want a supercap is limited by the number of characters who have skills to fly them, not the super's price. Dropping the price of supers will have only a small effect on their demand. (I'm assuming a player does not want spare supers sitting about, they want most every one logged off in space with a pilot sitting in it.)

A player with little ISK can buy a super by using Real Money to buy PLEX, selling the PLEX for ISK and buying the super. As the ISK value of a PLEX increases, the number of PLEX the player need buy goes down. Increased ISK price leads to a reduced supply of PLEX. (Or, to put it another way, the decreasing price of ISK leads to decreasing demand for PLEX). This makes the PLEX a Giffen good.

A numerical example:

Say the ISK price of the PLEX increases by 10%. Any player deciding to make a big purchase now needs to buy 10% fewer PLEX. Lets say as a result of the better price, 5% more players decide to make such a purchase. Yes, the total players buying PLEX increases, and the total ISK bought increases, but as each now buys fewer PLEX, the total supply of PLEX goes down. Again, we have a Giffen good.

What this means for CCP: The increasing ISK value of the PLEX would reduce revenue, and hence is not in CCP’s best interest.

Not much we can do. PLEX holders have no reason to sell.

Now, if CCP introduced a regular tax or fee for holding a PLEX, we can expect PLEX to flood the market. The fee needn't be large, perhaps 0.01% of the median Jita value per day. People would be more compelled to only buy a PLEX when they need it, as opposed to hoarding it for no reason.

It's not "no reason". It's protection against continuing price rises, or as an investment.

Edit: Then I'd keep my PLEX on an alt account that has a zero wallet balance. Cannot get blood from a tulip.

A fee pff, this is EVE not WOW. CCP should add a 30 day expiration timer to PLEX. When it reaches 0, the PLEX deletes itself and the EVE client plays a video of a smiling Hilmar, lighting a cigar with 20€ bill. This would end all the PLEX hoarding.

suddenly I can't figure out how to edit my signature. I want to add the Giffen good post to it.

That's the problem right there, in my opinion.

Remember when a million was huge? I do.

I was over the moon when my wallet hit 100m. And I earned it. I didn't buy it from CCP.

Then came PLEX. CCP's answer to attracting all those millennials coming of age into the game. Now a billion is nothing. I feel barely adequate with my current worth of around 140b.

What a failed experiment PLEX turned out to be for actual gamers. Great for CCP, though, so it's here to stay. Unfortunately.

Mr Epeen

Funny though that so far, you, and all the other EvE is doomed sayers, have been wrong, because the price of PLEX has been increasing again and again.

a some are getting closer...

not the value of plex is rising!
the value of isk is decreasing!

Your name at the top, forum settings.

I looked at eve-offline. The average number of players on-line, averaged over a week or more, has been constant at 21000 for over 6 weeks. There was no drop of 10,000 from the new sov. In fact, the steady decline we've been having all year came to an end when the new sov rules hit.

Also ingame.