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Old 11-17-2012, 01:38 PM   #1
ru40342
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Default Dota 2 item market


This article is about the market of dota 2 item trading. All information provided are based on official information provided by Valve (dota 2 store).

The market of dota 2 item is interesting to analyse and can yield various findings, which can be used for buyers and sellers in this market to achieve market equilibrium.

Post Olygopoly
The market of dota 2 items is an excellent example of post oligopoly, similar to other goods and services such as fast food, financial services and insurance services. Although some aspects of it resemble classic monopolistic (large number of sellers etc.), two aspects, the degree of power of the dominant seller (in this case, Valve); and the homogeneity of the goods offered, affirm its statue of post oligopoly.

Price Determination
Post oligopoly has one very simple characteristic, price determination. Dominant seller, such as Mcdonald’s in fast food industry, Coke in the “cola” industry etc. has the absolute power of price determination and other sellers simply follow its price / close to their price. The dominant seller sets their price based on the demand they receive from the buyers and since they are the most powerful seller, they have the ability to manipulate buyers.

The reference prices (hence, the market price) of steam store items (couriers, bundles, keys etc.) are the price demanded by buyers as perceived from Valve, making it the most suitable price to be followed by other smaller sellers (in the dota trade forum). Under perfect market condition, a $10 item should be worth two of $5 items and vice versa. However, this is not the case.

Market Failure
The trade posts from most dota 2 trade forums, aka offers from buyers and sellers, are perfect resemblance of market failure. The source of the market failure demand side shock (as with most other macroeconomic conditions). Buyers often offer price that are way below market price (I’ve seen many offer 1 key for a courier worth 4-5 times its value). That is not a problem under perfect information condition. Sellers should have the information to ignore such offer.

Source of Market Failure - Information?

However, in this market, as with many post oligopoly markets, information is very scarce. This has negative psychological effect to the sellers and they misinterpret such market failing condition as ideal and accept it. That’s the reason we see many sellers offer some couriers for 2 keys, a discount of 50% under market price.

Regulation
However, a crucial difference between dota 2 items market and normal post oligopoly market is that both barter system as well as monetary system are used for normal transaction. Since barter system are harder to regulate, and information of barter system is harder to monitor, dominant party and regulatory party should be given the responsibility to regulate it (example of such system is international trading where both systems are implemented. Hence, every industry needs a worldwide regulatory market for international trading to prevent fraud / discrimination).

In a way, the problem of market failure for dota 2 items market resemble labour market discrimination where certain labour are exploited and paid relatively low wages by firms (since most sellers of item obtain them either through playing dota 2 game, or through purchase, the costs of obtaining item are the price of labour, or wage)

In short, this condition is called “market friction”. Refer Mortensen (2005) and Pissarides (2000) for more information on market friction. Both of them won the Nobel Prize in Economics in 2010).

Short Run Solutions

In economics, there are two good short term solutions. First, the dominant sellers / regulatory party (both are Valve) can improve the information condition of the market by providing more references to both buyers and sellers. Such move can help adjust the market back to the equilibrium and ensure short term stability. Buyers and sellers can refer to the market price whenever in doubt (this has been done as discussed earlier, since Valve already listed the price of all items in numerical terms, hence buyers and sellers should be able to use simple calculation to determine the prices under barter system). However, such information can be diluted with the categories of items available. For example, the Fireborn Odachi (priced at $4.99) are categorised as “mythical” while the Axe’s Sylnasher the Winged Axe (priced at $5.99) is categorised as “rare”. These terms perhaps provide misleading information during normal transaction. Unless there are important reasons, the categorical system (common, uncommon etc.) should be abolished as they can be misleading. Numerical price is more than enough to serve as reference (perhaps categorical system only implemented when items are not available in dota 2 store such as Pudge’s hook or Tiny’s ice skin).

The second short term solution (and the more extreme solution) to such problem is to implement price control system. Since the source of the problem of such market failure is the demand side shocks, the regulator (which is Valve, again) can implement price-floor control. Floor price can be set to ensure market failure is in manageable level in short run. Hence, price cannot be manipulated under certain level. This will ensure the rights of either party to be protected. Floor-price is implemented in many good/service markets and labour market (minimum wage).

Long Run Solution
However, the best long run solution for such problem is the automatic adjustment of the markets (buyers and sellers), aka invisible hand. Market price will be reached when both buyers and sellers fully understand their powers and information. Under most markets this is doable in the long run. However, dota 2 items market possesses difficulties to reach such long term equilibrium as the life of this game may not be long enough to reach such scenario. Furthermore, players of dota 2 may not have the initiative to ensure market failure can be corrected. After all, as quoted by John Keynes himself, in the long run we are all dead (in this case, the game is dead)

So, all and all, I hope this article can provide an insight of dota 2 item market (from my perspective). I truly hope to be able to help correct the market failure that encountered by the market now. Besides, hopefully this article can provide information for buyers and sellers in their trading of items.

p/s: I am doing my phd in economics (monetary and econometrics) and a lover of dota / dota 2. I plan to write an article of dota 2 item market soon and this is the early abstract of such article. I welcome any comment from anybody including troll comment.

To the moderators, I am not sure of which sub-forum to post this article so i am posting it in "dota chat".
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Last edited by ru40342; 11-17-2012 at 02:36 PM.
Old 11-17-2012, 01:51 PM   #2
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Oh wow, I'll take a look later, but this looks interesting.
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Old 11-17-2012, 01:56 PM   #3
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Well, here is well, or Marketplace sticky.
But I prefer this to stay here, and I'll upvote if this could be anymore reddit.
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Old 11-17-2012, 02:07 PM   #4
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Nice read
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Old 11-17-2012, 02:29 PM   #5
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I'll leave it here, and as an economics buff myself, i confirm this is not waffle.
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Old 11-17-2012, 03:03 PM   #6
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Quote:
Originally Posted by InvokerofTime View Post
I'll leave it here, and as an economics buff myself, i confirm this is not waffle.
Nice to know that other economic nerds play dota 2

I heard economic nerds just sit in the basement in front of their computer staring at statistical outputs or biting their pencil while trying to solve a complex differentiation model haha.
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Old 11-17-2012, 03:11 PM   #7
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Thanks for the article. You probably put a lot of effort.
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Old 11-17-2012, 03:20 PM   #8
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Originally Posted by jesusatan View Post
Thanks for the article. You probably put a lot of effort.
Well I love dota 2 and economics so this is ok. Modelling this market would be 1000000000000000000x harded tbh haha.
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Old 11-17-2012, 03:20 PM   #9
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wall of text, s1 make TL;DR pls
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Old 11-17-2012, 03:45 PM   #10
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Quote:
Originally Posted by IHateLeavers View Post
wall of text, s1 make TL;DR pls
I am sorry for such long and boring text haha. Wait until u read my final article on such topic. I guess economists are boring after all haha. U will probably think the text part is the most enjoyable (compare to the methodology and the analysis ) haha.
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Old 11-17-2012, 03:48 PM   #11
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Keys are more valuable relative to dropped items given the same in-store price for the reason that there is relative shortage of supply. Keys never drop, so supply is entirely dependent on users who purchase them. We can safely say that there are far more players who don't spend on keys than those who do, yet they all play games and thus produce dropped items in the long run.

Mythical rating probably refers to how often it drops, and is not dependent at all on store price. Therefore, we can assume that more $5 rares will drop than $4 mythicals.

Demand for each item is also dependent on the how good the item looks, which is a subjective value. As per your example, the Fireborn Odachi may be more valued by players because it changes the character's animation, a rare trait for an item. Thus, it may be traded for items with higher shop cost.

One last point: Due to Diretide item farming, there has been a huge influx of items. This will surely reduce prices for the dropped items relative to keys, but barter between items should remain stable.
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Old 11-17-2012, 03:58 PM   #12
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Every MMO faces the same problem. I doubt what you suggest can solve a decade long issue. Traders will always find ways to intentionally make their offer looks better. If not, they will hold until an appropriate moment before trading them for a higher value.

That is why, just don't bother with cosmetics too much. Play the game as it is, a Tidehunter, Sven, Juggernaut or Axe without all the fanciful stuff still look very pretty.
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Old 11-17-2012, 04:06 PM   #13
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thats the real cancer of PD, not trolling, noobs or anything. its posts about non gameplay or balance related stuff like market items which no one needs to buy or equip your hero with at all and heros (not) having "personality" be it because of voice set or background story.

go fuck yourselves with these kinds of posts.
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Old 11-17-2012, 04:08 PM   #14
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OP, be ready to get a lot of flame from upset faggots that manipulate the market via smurfs.

Sad to see how easily people get swayed by the market
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Old 11-17-2012, 04:15 PM   #15
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Quote:
Originally Posted by Thunderbolt View Post
thats the real cancer of PD, not trolling, noobs or anything. its posts about non gameplay or balance related stuff like market items which no one needs to buy or equip your hero with at all and heros (not) having "personality" be it because of voice set or background story.

go fuck yourselves with these kinds of posts.
It's a PhD article. Fuck higher education, amiright?
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Old 11-17-2012, 04:39 PM   #16
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Quote:
Originally Posted by Uncle_Zhuge View Post
Every MMO faces the same problem. I doubt what you suggest can solve a decade long issue. Traders will always find ways to intentionally make their offer looks better. If not, they will hold until an appropriate moment before trading them for a higher value.

That is why, just don't bother with cosmetics too much. Play the game as it is, a Tidehunter, Sven, Juggernaut or Axe without all the fanciful stuff still look very pretty.
Err... ok. Does that mean that every country has inflationary problem so central bankers can just sit there playing dota 2? (haha troll comment hope you don't mind :P). Well in reality maybe most central bankers are sitting in front of their computer playing dota 2 all days. (matchmaking with bernanke!)

The point is that you are exactly right (about all MMO...). I can only try my best to use what I know to try to give more information to as many players as possible so that the market hopefully can adjust itself one day without regulation. I doubt as well to the significance of my article (god knows when I can finish it haha) but I see the need to address this problem to as many people as I can.

---------- Post added at 05:18 PM ---------- Previous post was at 05:16 PM ----------

Quote:
Originally Posted by Thunderbolt View Post
thats the real cancer of PD, not trolling, noobs or anything. its posts about non gameplay or balance related stuff like market items which no one needs to buy or equip your hero with at all and heros (not) having "personality" be it because of voice set or background story.

go fuck yourselves with these kinds of posts.
Haha thanks for the comment. Well I won't play dota 2 if I don't like to troll. However we are talking about finding solutions to the problem we facing so better don't joke!

U can invite me for a game and see how my AA sucks haha. cheers!

---------- Post added at 05:20 PM ---------- Previous post was at 05:18 PM ----------

Quote:
Originally Posted by luckycandies View Post
OP, be ready to get a lot of flame from upset faggots that manipulate the market via smurfs.

Sad to see how easily people get swayed by the market
Thanks for the comment haha. Well give me your best shot faggots!! lol

hopefully my article can help some people in anyway

---------- Post added at 05:22 PM ---------- Previous post was at 05:20 PM ----------

Quote:
Originally Posted by wzuni9a View Post
It's a PhD article. Fuck higher education, amiright?
Haha you are very funny. Although I am doing my Phd, but this is not my thesis haha (I will be killed by my sv if this is the one)

This is just a noob article to address a problem to a game I know and love. Not even worth a nationwide journal don't worry.

TBH fuck higher education from me too. They are eating me alive...

---------- Post added at 05:39 PM ---------- Previous post was at 05:22 PM ----------

Quote:
Originally Posted by wzuni9a View Post
Keys are more valuable relative to dropped items given the same in-store price for the reason that there is relative shortage of supply. Keys never drop, so supply is entirely dependent on users who purchase them. We can safely say that there are far more players who don't spend on keys than those who do, yet they all play games and thus produce dropped items in the long run.

Mythical rating probably refers to how often it drops, and is not dependent at all on store price. Therefore, we can assume that more $5 rares will drop than $4 mythicals.

Demand for each item is also dependent on the how good the item looks, which is a subjective value. As per your example, the Fireborn Odachi may be more valued by players because it changes the character's animation, a rare trait for an item. Thus, it may be traded for items with higher shop cost.

One last point: Due to Diretide item farming, there has been a huge influx of items. This will surely reduce prices for the dropped items relative to keys, but barter between items should remain stable.

Thanks for the reply. IMO, first of all, I do not agree that keys are scarce compared to dropped items. Since the total supply of the market largely controlled by the dominant firm (in this case Valve), supply of the items are relatively stagnant. To say that they are not dropped hence they are more valuable is like to say that money(wage) worth more than the input of labour, hence the firm can pay less for it? Think of this situation as such: the players that get the dropped items as labours and the players that want to trade keys for items as the firm. Does that make more sense?

For your second point: same answer. If you want the item, you either play more or you pay with real currency or virtual currency (including key). So the dropped rate does not actually affect the market price much as it is always available in dota 2 store.

Third point: exactly. That's the reason baby rosh is valued higher from Valve than other couriers although they have the exact same function. Since Valve already factor in that aspect, and since they are the dominant player in this market, we follow their price and take it as market price.

Fourth point: again same answer. The total supply of the market does not actually affected by drops from diretide as Valve is still the largest supplier. If Valve feels that oversupplied is happening they will drop their price or face a possible loss / lower profit. Remember all the items are digital items and the total supply is hard to imagine.
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Old 11-17-2012, 04:44 PM   #17
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I do not agree that keys are scarce compared to dropped items. Since the total supply of the market largely controlled by the dominant firm (in this case Valve), supply of the items are relatively stagnant. To say that they are not dropped hence they are more valuable is like to say that money(wage) worth more than the input of labour, hence the firm can pay less for it? Think of this situation as such: the players that get the dropped items as labours and the players that want to trade keys for items as the firm. Does that make more sense?
Keys are like an exchange rate for money, so if a large supply of items (e.g. from diretide) appear, then keys are going to become relatively scarce. And no, key market is not manipulated by valve, the best way to think of it is by currency exchange rates imo.
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Old 11-17-2012, 05:09 PM   #18
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Keys are like an exchange rate for money, so if a large supply of items (e.g. from diretide) appear, then keys are going to become relatively scarce. And no, key market is not manipulated by valve, the best way to think of it is by currency exchange rates imo.
Keys are exactly like exchange rate for money (I prefer to call it virtual money in dota 2, same as chips in casino). The biggest problem that most people do not get is the total supply of items. Total supply is not about total items owned by demanders, but total items produced by the sellers. Since dota 2 items are digital items, total supply will not be significantly affected by the diretide (especially if you think of the fact that diretide is just around 20 days while dota 2 has been going for more than a year). So all and all the ratio of key to items are hardly affected by diretide imo.

Just imagine any oligopoly market. Do you see market price getting lower as production continues?

Lastly, I do not say key market are manipulated by Valve. I am saying the supply of keys are dominated by Valve.
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Old 11-17-2012, 05:30 PM   #19
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Keys are exactly like exchange rate for money (I prefer to call it virtual money in dota 2, same as chips in casino). The biggest problem that most people do not get is the total supply of items. Total supply is not about total items owned by demanders, but total items produced by the sellers. Since dota 2 items are digital items, total supply will not be significantly affected by the diretide (especially if you think of the fact that diretide is just around 20 days while dota 2 has been going for more than a year). So all and all the ratio of key to items are hardly affected by diretide imo.

Just imagine any oligopoly market. Do you see market price getting lower as production continues?

Lastly, I do not say key market are manipulated by Valve. I am saying the supply of keys are dominated by Valve.
1. normally it takes about 2-4hrs to get one item, in dtide, it takes about 20minutes on average. I have got more than 80% of my items from dtide, (nb i started about 2months before items started dropping)-I have also heard from traders that dtide has dropped the price of items pretty spectacularly.
2. being digital has nothing to do with it, all it means is that valve can make as many of them as they like with no costs.
3. I believe we are discussing the secondary market, so valve does not dominate the supply of keys.
4. there will be more items, but also more players so the price will remain roughly the same.
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Old 11-17-2012, 05:51 PM   #20
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This is a lot interesting...add thread to favorites.
I wanna see how far this will go. Maybe changes will start after this
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Old 11-17-2012, 05:59 PM   #21
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It's a PhD article. Fuck higher education, amiright?
Its a game, dickhead. no need for higher education here.
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Old 11-17-2012, 06:05 PM   #22
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1. normally it takes about 2-4hrs to get one item, in dtide, it takes about 20minutes on average. I have got more than 80% of my items from dtide, (nb i started about 2months before items started dropping)-I have also heard from traders that dtide has dropped the price of items pretty spectacularly.
2. being digital has nothing to do with it, all it means is that valve can make as many of them as they like with no costs.
3. I believe we are discussing the secondary market, so valve does not dominate the supply of keys.
4. there will be more items, but also more players so the price will remain roughly the same.
Thanks the comment (you know economists like to argue right? haha)

Bro you misinterpret the concept of total supply (market supply). Total supply is not how many units of a good / service owned by the players. Total supply is the total goods / service owned by the players + total supply in inventory of the firms + total work in process of the firm + total inputs (raw material, labour, technological level). So 20 days of diretide may result in you getting more items does not mean that 20 days of diretide result in the increase of total supply.

The fact that prices are generally perceived lower now is the exact point of me wana write an article about it.

Besides, you also misinterpret the concept of digital goods / service. Digital goods have two affect on such arguement. First, digital does not have wear and tear depreciation, does make its price more persistent. Second, digital goods have significant effect on the determination of market price since total market supply of digital goods is hard to imagine

The fact that we get more items during tidetide does not mean total supply increase, it just means that the portion of the total supply is transferred from Valve to you and me, thus do not affect the value of the items significantly

Finally I believe you misinterpret my point about keys. I am saying Valve dominate the supply of keys (primary market or secondary market) not monopolize the supply of keys in secondary market. Since valve has the monopoly power to the production of keys, they of course dominate the supply of keys in the secondary market as well. (especially buyers in secondary market can obtain the key through first party - Valve through simple transaction).

Simple example of it would be exchange rate market (using your example hope you don't mind :P). although exchange of currencies does not involve the central banks of both currencies, they still are the dominant force in the foreign exchange market.

---------- Post added at 07:05 PM ---------- Previous post was at 07:04 PM ----------

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Its a game, dickhead. no need for higher education here.
Haha thanks for the flame.
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Old 11-17-2012, 06:11 PM   #23
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1. No, I disagree, in this case i view the supply of keys to be amount of keys that people are actually willing to trade.


2. your main mistake imo is to assume that the supply of items is finite, it isn't. Also, valve can create them instantly, so there is no WIP items.

3. You aren't transferring some of the supply from valve to us, you are creating new supply for us. If we apply your logic, valve has infinite amount of items.

4. Valve do not touch secondary markets, they only apply in the primary market.

5. There is infinite supply, also infinite demand, so the reason there is even a price of it is because valve restricts the market supply. Therefore, you can write off most of valve's supply of items as being non market.

ps I am also an economist and i also like to debate (arguing involves personal attacks)
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Old 11-17-2012, 06:53 PM   #24
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1. No, I disagree, in this case i view the supply of keys to be amount of keys that people are actually willing to trade.


2. your main mistake imo is to assume that the supply of items is finite, it isn't. Also, valve can create them instantly, so there is no WIP items.

3. You aren't transferring some of the supply from valve to us, you are creating new supply for us. If we apply your logic, valve has infinite amount of items.

4. Valve do not touch secondary markets, they only apply in the primary market.

5. There is infinite supply, also infinite demand, so the reason there is even a price of it is because valve restricts the market supply. Therefore, you can write off most of valve's supply of items as being non market.

ps I am also an economist and i also like to debate (arguing involves personal attacks)
Err... first of all plz do not mind if I used or use any bad language for reply. Here is my response to your response of my response to your response...... haha

1. Mate seriously you have to go back to the basic of economics and see the concept of primary and secondary market such as foreign exchange market and stock market. I do not wish to interpret or I will be giving a lecture on "macroeconomics" haha.

2. Again mate you completely misinterpret my point. Read my previous comments. I am saying total supply if digital goods is hard to imagine (hard to numbered). However, total supply cannot be infinite. In a simple explanation, you need time / labours / capital to create the code for such items and since those inputs are finite, total supply cannot be infinite. Wip is used to explain market supply concept so my bad haha.

3. Mate really? Ok I give you a simple example what happen to valve office. Bear in mind this is very simple so don't flame haha (or you can still flame me i guess... Internet rulez!)

They are "finite" capital (lets say computers), "finite" labours, and ofc "finite". So total supply is ofc finite (but can be large due to relative ease of production process). Diretide is coming and valve have to create many many many items for players like you and me. So Valve "finite" labours will use "finite" capital within "finite" time to create many many many items for you and me during diretide. So diretide comes and these "finite" supply of items are transferred to many many players during many many games of diretide. The terms transferred mean give to players since the total supply is large in quantity. Besides, production is part of supply subjecting to costs

4. Refer to my answer in (1), I am not saying they touch secondary market...... I am saying they are dominant aka have great power aka can easily manipulate (bear in mind it is "can" and unsure either "will or will not". Ok i am going to use the example of stock market after all (hope you don't mind :P). After the initial public offering, the firm itself has great power in the secondary market since they can issue bonus issue, split of shares etc. Same case here. The supply of keys in the primary market will have great effect in the secondary market, making Valve the dominant force in secondary market as well (man that's some long explanation lol)

5. I can't believe I hear this from an economist lol (btw cheers econ rulez!!). Only god can create infinite supply. I can't add more to it... Furthermore, man I really can't explain more about total market supply to you. Go for firm analysis part of Microeconomics) and check out oligopoly market supply (production) functions or I will be writing a text book here haha.

Hey I am quoting Amartya Sen here. He said during free time he likes to argue with his wife haha.

p/s: I totally think you need to read my writing again bro
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Old 11-17-2012, 08:11 PM   #25
InvokerofTime
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1. I do not believe that people who do not trade as market participants.

2. What I am saying, is that people getting a sudden collection of items (rough guess 80% of which they don't want), means that there will be a sudden glut of items. This should subside.

3. You are misinterpretting my point. I am not disputing that items from dtide are finite, and i accept your point, what I am disputing, is that valve cannot create as many items as they like.

4. I accept that, but what I am saying, is that Valve are not a direct buyer or seller in the market. But I accept they have power over it, but through their control over the primary market, ie steamstore.

5. Sorry, i misinterpreted your previous point, i thought you were implying valve had a stockpile of items.

6. if i have a word document, i can send it to an infinite no. of people, digital goods have no marginal costs, therefore I regard it as effectively infinite, the limiting factor is disk space on valve's servers which is, as you can imagine, effectively limitless. Not absolutely, but it could probably store the item choices of easilly 10bn people. So i regard it as effectively infinite.

ps i have not (yet) gone to university to study economics, i have a firm offer though.
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Old 11-17-2012, 11:18 PM   #26
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Imperfect information is one of the mechanisms of a free market economy.

The way the current Dota 2 economy works is probably the most profitable way Valve can earn more from people engaging in trading.

Why would Valve want to impose a price cap on an Unusual Golden Roshan to 100 treasure keys (250 USD going to Valve's pocket) when people would be willing to buy 300 or more treasure keys to trade for one?

There's a reason why:
Quote:
* Valve created different tiers (Common, Uncommon, Rare, etc.)
* Valve does not price all commons at 1 dollar each
* Valve created limited time edition items
* Valve has items that cannot be bought from the store
Let the economists dream.
Let the profit traders have fun with their arbitrage.
But in the end, Valve takes more money.
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Old 11-17-2012, 11:43 PM   #27
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please do not buff the seller, they are op in dota 2 market
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Old 11-19-2012, 06:54 AM   #28
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Quote:
Originally Posted by InvokerofTime View Post
1. I do not believe that people who do not trade as market participants.

2. What I am saying, is that people getting a sudden collection of items (rough guess 80% of which they don't want), means that there will be a sudden glut of items. This should subside.

3. You are misinterpretting my point. I am not disputing that items from dtide are finite, and i accept your point, what I am disputing, is that valve cannot create as many items as they like.

4. I accept that, but what I am saying, is that Valve are not a direct buyer or seller in the market. But I accept they have power over it, but through their control over the primary market, ie steamstore.

5. Sorry, i misinterpreted your previous point, i thought you were implying valve had a stockpile of items.

6. if i have a word document, i can send it to an infinite no. of people, digital goods have no marginal costs, therefore I regard it as effectively infinite, the limiting factor is disk space on valve's servers which is, as you can imagine, effectively limitless. Not absolutely, but it could probably store the item choices of easilly 10bn people. So i regard it as effectively infinite.

ps i have not (yet) gone to university to study economics, i have a firm offer though.


Mate srsly u need to refine ur understanding on theory of microeconomics before replying especially firm analysis and supply analysis.there are no.such thing as infinite supply and 0 mc in this known world.logic and theory are two different things. I cant reply u.all day.

Gl for ur job offer tho.

---------- Post added at 07:54 AM ---------- Previous post was at 07:46 AM ----------

Quote:
Originally Posted by RTSDealer View Post
Imperfect information is one of the mechanisms of a free market economy.

The way the current Dota 2 economy works is probably the most profitable way Valve can earn more from people engaging in trading.

Why would Valve want to impose a price cap on an Unusual Golden Roshan to 100 treasure keys (250 USD going to Valve's pocket) when people would be willing to buy 300 or more treasure keys to trade for one?

There's a reason why:


Let the economists dream.
Let the profit traders have fun with their arbitrage.
But in the end, Valve takes more money.
Mate free market cant reach equilibriuum under imperfect info and there are no such thing as free info are mechanism of free market.imperfect info will only cause market failure im addressing it.

As for the price control,plz read my absract again.u misintrepret my point
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Old 11-19-2012, 11:25 AM   #29
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give me betakey pls
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Old 11-19-2012, 11:36 AM   #30
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^ban this guy
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Old 11-19-2012, 11:54 AM   #31
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There is no way Dota 2 market is Olygopoly. The market is the pinnacle of Monopoly. There is only 1 manufacturer and that is Valve. Valve will tell you where, when, how often, what will be produced at that moment and then Valve let you, the customers, deciding the price based on your own subjective. For example, the Diretide even indicated that black greevil is supposed to the hardest to get, but Colored Greevil is priced higher than black because players believed that the Colored Greevil is simply better.
In an ideal world, no one should buy Treasure Keys from Valve because you possibly traded and got your items from another players. The treasure key is merely facilitating the trading process like gold. And who is the primary manufacturer for Treasure Keys? Valve. There is no other company that can manufacture key except Valve thus we can conclude that this is a monopoly market.
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Old 11-19-2012, 12:03 PM   #32
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Quote:
Originally Posted by Thunderbolt View Post
Its a game, dickhead. no need for higher education here.
Looks like your jimmies got rustled

BTW Nice read OP
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Old 11-19-2012, 12:20 PM   #33
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Interesting read, indeed. Now, if I may ask a simple, semi-related question that has been bugging me for a while.

Why are keys used for trading? Are they simply the currency that has been adopted? Because I don't know anyone who actually wants to open up treasure chests, the items in them generally blow, and the odds of you getting an item with a value equal to or greater than the key itself is like 50%.

So simply, people use keys for nothing more than currency and never use them?
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Old 11-19-2012, 12:32 PM   #34
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Nice read (complete with citations, no less).

+1 Internets to you.
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Old 11-19-2012, 01:40 PM   #35
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Very interesting.
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Old 11-19-2012, 02:18 PM   #36
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Quote:
Originally Posted by Thunderbolt View Post
Its a game, dickhead. no need for higher education here.
For someone who hates these kinds of posts you sure visit the thread a lot. (Especially if you're reading this.)

BTW OP, a single key can now buy far more common/uncommon items than before the event. That certain items have gone lower in price is a fact whether or not you believe that supply hasn't changed. (I'm not even arguing. Just stating facts.)
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Old 11-19-2012, 02:21 PM   #37
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good read
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Old 11-19-2012, 02:49 PM   #38
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Can I have tl;dr version?
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Old 11-19-2012, 04:14 PM   #39
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It's just a lot like what AH manipulation in WoW used to be at least, except in this case the currency is largely dominated by keys and trades are far less regulated and done through unofficial channels. Valve also has a lot of power when it comes to manipulating the market.

Also, because of the nature of the whole scheme, you may run into problems with certain people's money laundring. TF2 has a budtastic example of this already with - krhmn - russian people doing bad trades with dirty currency to get clean cash in return.

If you want to make money on the economy, go ahead, but you could just as well try to do it on craiglist or then by just getting an actual job. Or trying to make a polycount pack. Succesful trading is a story for few which needs a bit of luck as well.

Valve attempts to cash in at large as games, keys, and other must-be-purchased items are used as the currency.
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Old 11-19-2012, 04:23 PM   #40
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Quote:
Originally Posted by slence View Post
Can I have tl;dr version?
k.

1. Dota2 is an interesting market to study because of the power of one seller (valve) and also the large number of seller

2. Valve sets the dominant price, the other sellers follow (imo kinda a weak point, as most people trade in other items, diluting valve's power)

3. There is imperfect information available.

4. It is not possible to make dota a perfect market, as the market is constantly changing, ie new items etc.

As with all economics, it is mostly common sense, but needs to be taken deeper.
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