Market Discussions

I never said the price is constant, or it doesn't fluctuate, my point is the fluctuation in the long term is due to one thing and one thing only, the cost of production.

Let me put it in a simple example for you. Let us say the production cost of a drone damage amp is 1m, we are also assuming moon mineral prices are constant. Now let us say the mod gives a 50% damage bonus and the demand is 100,000 units per day, because everyone is using it. Now is a environment like EVE, where you don't have market barrier to produce or enter a given market, suppliers are going to keep undercutting each other till they reach a price of 1m-1.1m. This is not an opinion, this is basic economic theory and 1 of the few that all economists agree on. If the bonus drops to 10% and demand plummets to 5k units sold a day, then we will have a market glut. What will happen in the short term is prices are going to drop, but as soon as profits become below 0% suppliers are going to be dropping by droves, until we reach the equilibrium point where we have 5k units demanded, 5k units supplied and a price of 1m-1.1m again.

"Ishtars in Sinq Laison are down 5% from their peak and their falling prices are causing Photon Microprocessors to drop too, back from 47k to 43.5k in Jita and 50k from a peak of 58k in Dodixie."

This statement proves how inexperienced you are in the field of economics, as you fell for the most basic fallacy in econ, correlation doesn't equate causation. You assumed that lower ishtar demand caused lower micro processer prices. I could have easily used the same information to say that ishtar prices are down not because of demand, but actually because of lower microprocessor prices , supporting my point and not yours. You see ishtars by themselves constitute a very small portion of the market of microprocessors, much like domi's constitute a small portion of the trit market. So a change in the demand of ishtars will not significantly affect the prices of processors (much less than 1%). For a change in the prices of raw material to happen you need significant changes across the board, like changing the mineral composition of all battleships, and even that only affected the mineral prices slightly. But the other way around, a 5% change in the microprocessor prices will cause a 5% change in Ishtar prices.

And please if we are going to use prices, let us use jita prices, because other hubs are still inefficient in the short term much more prone to random fluctuations.

Using the argument that prices will not reach the equilibrium price, or that the supply is not perfectly elastic, because people are stupid, is plainly false. Those people do exist, but what is beautiful about the free market is those people are weeded out, much like evolution. Because of the losses they take, their position is simply not sustainable. Sure there is a small percentage of them but they will never affect the market in the long term. This is why in the real world you don't have companies that operate under loses for 5+ years. And are you telling me people that figured out how to use the t2 production UI and made spreadsheets about them are too stupid to understand that the minerals they mine are not free?

In the long term the price of all modules and ships is production cost + basis points for profit. You can check any item you want and this will always be true. In the long term modules and ships affect the prices of raw materials, but only on the macro scale and not the micro. No one type of module or ship can significantly alter the raw minerals prices.

I have clearly used "short term" and "long term" multiple times in my posts. There is no misconception as from the beginning I separated both cases, it was you who failed to do so.

This is a forum post discussing the long term prices of drone mods / ships. Seven days is not "significant lead time". You will earn a fast buck but this is not sustainable speculation. When you want to invest in a module, you speculate on the long run (at least a month) on the fundamentals and not on small fluctuations (supply / demand discrepancies) in the short term. What you are doing is trading and not investing, you are effectively betting on the "perceived value" of the module and not its real value. This practice is shrouded in rules of thumbs, "gut feelings" and most of all luck, and is not grounded in economic theory.

What you are basically saying is I agree with you but I don't want to admit it. The way I see it (and I might be completely wrong), is you steering the topic towards your market endeavors and talk about what you did lately, when the topic was clearly about "if the fundamental value drone relating things are going to change, given the recent nerfs". And the clear answer, as in the first post, is no (unless of course there is a change in raw material prices).