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Weird Competitor Behavior

Author
Arpad Elo
BrightFuture
#1 - 2012-03-09 00:28:56 UTC  |  Edited by: Arpad Elo
I'm trading in an item that has a really good mfg PPSD, narrowish mfg margins, and a low unit volume. There's not a lot of volume to the bids. Someone recently entered a large volume ask (4x daily vol) with a much lower PPSD (half), but I feel like his chosen PPSD is still too high to discourage competition (i.e. half of something huge is still enoughto continue to compete).

I feel bad here, because I feel as though killing half our margins is needless, whereas if he were to cut more I might leave and he would have achieved something by cutting.

The only explanation I can come up with for this is that he's undercutting me in terms of isk per hour per trade slot. If I don't actively manage as many trade slots as he does, it becomes cost prohibitive for me to keep my order updated, whereas he can balance that slot against like 150+ slots.

Does that sound like what's happening or what? I don't have a background in economics or game theory, but just a little passing knowledge.

Edit: Concision. Also, rep++ :)
Tanith YarnDemon
Hypernet Inc.
Umbrella Chemical Inc
#2 - 2012-03-09 00:38:41 UTC
I think you need to define your PPSD.
Arpad Elo
BrightFuture
#3 - 2012-03-09 00:51:04 UTC  |  Edited by: Arpad Elo
492m-252m but that's not really relevant due to volume issues. It's more like 40m/d vs 20m/d.
Brock Nelson
#4 - 2012-03-09 00:59:16 UTC
Personal Portable Security Device?

Signature removed, CCP Phantom

Tauranon
Weeesearch
CAStabouts
#5 - 2012-03-09 01:08:35 UTC
I stick orders in the middle of the spread when I get sick of traders interfering with acquisition. They have a tendency to fill when the trader works out that 0.01ing it will not make it go away.
Arpad Elo
BrightFuture
#6 - 2012-03-09 02:21:24 UTC
ask in this case is the asking price i.e. a sell order.

ppsd = profit per slot day.

Kara Books
Deal with IT.
#7 - 2012-03-09 02:39:38 UTC
Well, there could be many reasons, keep in mind, most if not all players now are human, lets hope it stays this way for a good while
Arpad Elo
BrightFuture
#8 - 2012-03-09 06:01:18 UTC
Kara Books wrote:
Well, there could be many reasons,


Yeah that's what I was asking about.
Dane Eham
Negative Density
#9 - 2012-03-09 14:01:40 UTC  |  Edited by: Dane Eham
You don't know what margin he is operating on. In Jita I frequently hike a buy price by a large amount when I get tired of the .01 isking. I don't sell the item in Jita so to a station trader my move may make no sense. From my perspective, yes I've given up some potential profit but now I may actually fill that order. I'm not going to sit around all day and play .01 isk games to make a few extra million.

And I'll do the same when I get tired of a sell order not moving many units or if I got a particularly good bargin when I bought those goods.

I'm completely OK with crashing the profitability of a single item when rabid order updaters are screwing up my game. I have plenty of other orders rolling around to generate some profit.
Lauren Hellfury
Full Pocket Aggro
#10 - 2012-03-09 14:45:04 UTC
Knowing a bit about what you do I can take a stab at the item you've noticed this on and if correct it is one that I have run before now and encountered similar behaviour. Hell, I've even done it myself.

Quick point though before heading into the possible reasons: Does the quantity dropped equal a round number or a daily volume achievable with an integer of any of the following; unresearched BP in station, unresearched BP at POS, researched BP in station, research BP at POS. (36/45/45/60)


One reason can be a misguided belief that a lower price drives up volume and that your competitor will therefore sell them more quickly.

One reason could be that your competitor is inviting a buy-out to re-establish the price at the higher level.

One reason could be that your competitor is attempting to crash the market to drive you (and others away) so that higher prices can be re-established by them later.


Because of the spread of these it is difficult to suggest a counter that will always work. Personally I usually go for an undercut of about 100k pu on items between 3 and 6 M to see what they do. If they respond similarly keep going until you find their bottom level or hit a point you are prepared to acquire additional stock at with no manuf. necessary.

Conversely if you are attempting to gain buy outs listing a small part of your stock at a time will often work. I've had so many people take 1/4 of a days manuf volume (even when it is close to a days trade volume) when listed with a massive slash price. Just keep repeating, often they'll bite twice but the third will be left to rot..... until the next person comes along.

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Ersteen Hofs
Republic University
Minmatar Republic
#11 - 2012-03-11 07:02:31 UTC
Probably just some idiot who forgot to check daily volume before producing, or who just does not realize that no matter how low he asks, daily consumption will not raise for most items. Or someone attempts to get rid of stockpile useless to him, like a suicide ganker who looted it off a transport, or a corp thief or something like that.

These things happen all the time with almost everything. For this reason I do not ever lock myself in only one item, instead I choose what to produce/sell once all the slots are free and choose only the items with most PPSD at the moment, and only as much as I can realistically sell in the time period of production considering the item's daily movement.
Ersteen Hofs
Republic University
Minmatar Republic
#12 - 2012-03-11 07:08:04 UTC
Tauranon wrote:
I stick orders in the middle of the spread when I get sick of traders interfering with acquisition. They have a tendency to fill when the trader works out that 0.01ing it will not make it go away.

this only works with high volume items which are already easy to sell. for slowly going stuff ppl will just keep 0.01 isking until you just sell to buy orders, and you're lucky if buy orders won't update to much lower price. in the end you will only hurt yourself.