I was curious, so I monitored the activity in the wool market for the last ten minutes of the contest. I even bought one lot at 12.00 myself (I sold my left-over wool q2 to Contest to get a placement [125th or so]), and I grabbed a snapshot of the market information 10 seconds after the contest ended. At the end there were still 51 market offers from 34 companies (let's call them "bag-holders" for the purpose of this brief analysis) totaling 153,248 units of wool q2 that didn't find a buyer.
So I started to wonder what kind of losses this amount of wool q2 represents...
Let's assume level of Trader for this calculation. Let's ignore the fact that wool q2 still has some value, since this is a very rough ballpark back-of-the-envelope guesstimate of an analysis.
9 days of production results in 8,019 units of wool q2 (green area, 2 workers, 20 m2). Let's round it to cool 8,000 units. So it takes the output of 19,2 ranches to get the 153,248 units in 9 days. Let's round it to 20 ranches.
Let's see...
Research cost
34*90,000 c for a Cattle & Plant RC in a green area*
34*10,000 c for Research**
Most of the wool produced by the bag-holders was probably sold at a decent price, so let's assign, say, 10% of this cost as losses for this calculation.
Total of 340,000 c for research infrastructure and research.
*Seeds, Corn and Wool so that the end product is q2 Wool. Cheapest and fastest way is q4 Seeds (resulting in q2 seeds after water is added [(4+0)/2=2]), q4 Corn (to get q2 corn by using q2 seeds and q0 water [(4+2+0)/3]) and q4 Wool (to get q2 Wool with q2 corn and q0 water [again (4+2+0)/3]).
**Total cost of research would be 3 x 5000 c + 6 days 18 hours... let's just be generous and assume that the producer already has at least q4 seeds. Then the research takes 10,000 c and 4 days 12 hours leaving about 9 days for production.
Production infrastructure cost
20*75,000 c for a Plantation (seeds and corn)
20*75,000 c for a ranch (Cattle-breeding)
Total of 3 million for the production infrastructure.
Running total: 3.3 million c for the production infrastructure and the technology.
Opportunity cost
Had the bag-holders spent their 3.3 million c on power plants on a green area (10 hours for the building of the plant and 13 days 12 hours = 324 hours of production), they could have built 23 power plants that would have generated a total of 66,403,952 units of power. Assuming a market price of 0.08 c/kWh, this would have resulted in revenues of 4.1 million c.
Running total: 3.3 + 4.1 million c = 7.4 million c.
Mispricing
Let's assume that 80% of the unsold wool would have sold at 24 c (the lowest value q2 wool on the list), if it had been originally posted at that price (one third of the 153,000 units was posted at 70 c or higher). That would have been 122600 units of wool q2 sold at 24 c, or 2,94 million c. Let's call it 3 million even.
Running total: 7.4 + 3 million c = 10.4 million c.
So we're talking 10.4 million c worth of direct costs, unrealized gains, opportunity costs and mispricing losses here. So on average, each of the 34 bag-holding producers took losses of 306,000 c at the closing of the contest.
Top three bag-holders had 29,000 units, 26,000 units and 10,000 units at the market. Their accounts took a blow of 2.0 million c, 1,8 million c and 680,000 c respectively.
End markets in the wool contest
Moderator: moderators
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Guest
1 Cattle-breeding plant ... 75,000
Research to q4 ... 10,000
Listing fee on the market ... 10%
Learning a lesson about markets? Priceless
There are some things caps can't buy. For everything else, there's Kapilands.
OK seriously though, I have to disagree with your premise a bit. But before I do:
If anyone reading this has extra q2 wool they need to liquidate, I will buy it at 3.00.
OK, that out of the way:
In fact, I'm not sure you can make an infrastructure generalization anyway. These things appeal mostly to people who are already in the business or needed something to enter anyway. On a specific case that may be valid but generally speaking I wouldn't assume everyone is hopping in and out like that.
An interesting analysis and an important lesson about obeying the market vs being stubborn. But that's just another cost tacked on the end of what was a very profitable enterprise.
Research to q4 ... 10,000
Listing fee on the market ... 10%
Learning a lesson about markets? Priceless
There are some things caps can't buy. For everything else, there's Kapilands.
OK seriously though, I have to disagree with your premise a bit. But before I do:
If anyone reading this has extra q2 wool they need to liquidate, I will buy it at 3.00.
OK, that out of the way:
They still have the research and the building left over. Assuming if you will that the research is worthless, even if they have no interest in the RC plant anymore it can be sold back to the system for 75,000 - making this value a large positive. Lets just consider it a wash.Research cost
34*90,000 c for a Cattle & Plant RC in a green area*
34*10,000 c for Research**
Most of the wool produced by the bag-holders was probably sold at a decent price, so let's assign, say, 10% of this cost as losses for this calculation.
Total of 340,000 c for research infrastructure and research.
In fact, I'm not sure you can make an infrastructure generalization anyway. These things appeal mostly to people who are already in the business or needed something to enter anyway. On a specific case that may be valid but generally speaking I wouldn't assume everyone is hopping in and out like that.
Here you're mathematically wrong. 1 Plantation can grow enough corn for 10 plants' worth of wool. You can't charge them for the whole plantation if they're not using it. And plenty did fine just buying corn.Production infrastructure cost
20*75,000 c for a Plantation (seeds and corn)
20*75,000 c for a ranch (Cattle-breeding)
Total of 3 million for the production infrastructure.
Running total: 3.3 million c for the production infrastructure and the technology.
Firstly the 3.3 million is off considerably via the explanation above. Secondly, now you're failing to count the opportunity cost. What about all the days when wool was being made and sold for 40, 50, 100+?Opportunity cost
Had the bag-holders spent their 3.3 million c on power plants on a green area (10 hours for the building of the plant and 13 days 12 hours = 324 hours of production), they could have built 23 power plants that would have generated a total of 66,403,952 units of power. Assuming a market price of 0.08 c/kWh, this would have resulted in revenues of 4.1 million c.
Running total: 3.3 + 4.1 million c = 7.4 million c.
Now this is valid. By being greedy they left a lot out there. Of course, I could counter-argue that to estabilsh the market equilibrium higher prices need to exist. That if said wool originally listed at 70+ had been placed at 50, it would have been undercut from there as well and something would still be left. I mean the idea that a market will be left completely empty at the end of the contest is pretty unrealistic, so I can't use that as the comparable standard.Mispricing
Let's assume that 80% of the unsold wool would have sold at 24 c (the lowest value q2 wool on the list), if it had been originally posted at that price (one third of the 153,000 units was posted at 70 c or higher). That would have been 122600 units of wool q2 sold at 24 c, or 2,94 million c. Let's call it 3 million even.
An interesting analysis and an important lesson about obeying the market vs being stubborn. But that's just another cost tacked on the end of what was a very profitable enterprise.
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Guest
I was merely estimating the cost of resources needed for producing 150,000 units of wool q2 that were left at the end of the contest in 9 days. Any of the wool that the bag-holders sold is not included in the calculation, since to have more wool they would have had to have (whew, what a mouthful of a verb construction) more cattle-breeding ranches, and their costs are not included in this calculation.Knolls wrote:Firstly the 3.3 million is off considerably via the explanation above. Secondly, now you're failing to count the opportunity cost. What about all the days when wool was being made and sold for 40, 50, 100+?Opportunity cost
Had the bag-holders spent their 3.3 million c on power plants on a green area (10 hours for the building of the plant and 13 days 12 hours = 324 hours of production), they could have built 23 power plants that would have generated a total of 66,403,952 units of power. Assuming a market price of 0.08 c/kWh, this would have resulted in revenues of 4.1 million c.
Running total: 3.3 + 4.1 million c = 7.4 million c.
Naturally the bag-holders made off like bandits with the rest of their wool-producing capacity, I know I did (just dipped my toe in for a cool million caps of revenue or so by putting in some 250,000 caps for three ranches and some research). And of course the end-of-contest losses should be factored over the profits of the entire contest, but that kind of data is completely unavailable, so I'll just have to satisfy myself crunching what little data we can get...
Of course. The left-over portion could have been smaller, though. Had some of the left-over batches been priced at a lower price, some of them would have sold.I mean the idea that a market will be left completely empty at the end of the contest is pretty unrealistic, so I can't use that as the comparable standard.
The total amount of wool sent into the contest was 8,382,362 units. Let's assume that 50% of this was self-produced and the rest bought from the market. That would mean that about 4,15 million units of wool were bought and sold during the contest. That would mean that the left-over wool represents 3.7% of the total amount of traded wool (or 1.8% of the total amount of wool turned in for the contest).
Absolutely. I'm trying to get a grasp of market dynamics of Kapilands from _very_ little data, so this kind of analysis is quite necessary. And it feeds my inner nerd quite nicely...An interesting analysis and an important lesson about obeying the market vs being stubborn. But that's just another cost tacked on the end of what was a very profitable enterprise.
