New Market, Old Pattern

One of the things I often look at in my job as a market analyst is the emergence of new markets. With Eve's new expansions every 6 months or so, this means some new markets on a regular basis. The last big expansion brought new items from wormholes, which seeded the market for components required in tech 3 item production, and the most recent expansion brought with it planetary interaction (PI) which also opened up new markets for players.

Firstly, in real life markets, there is a typical pattern to the cost of goods over time, shown in the graph below.

 New product categories typically sell for a high price initially. This is driven by a number of factors such as:

• scarcity
• new product categories are often seen as "premium"
• cost of manufacture tends to be higher until the market establishes itself and (if the product category is successful) economies of scale start to come into play
• Early markets are closer to a monopoly, so competition effects do not come into play immediately

As the market grows in volume, more companies start to make the product and competition ultimately also drives the price down.

Eve is slightly different since there is almost no scope for economies of scale to come into play, but manufacturing costs tend to be driven down in a similar way - components for production of new items are often introduced at the same time as the new products (for example, sleeper salvage and T3 items) and so manufacturing costs come down as the components required become less scarce and follow a similar pattern to the one shown in the graph.

The Market for T3

So how does this compare to the market for T3? Are we seeing the same patterns? Yes we are. The graph below shows how that market has developed during its first year.

Unfortunately we've missed the very start of the market by a couple of weeks, but I think you can see that the pattern is what would be predicted. You can pick any of the popular subsystems and you'll see the same pattern.

With unpopular subsystems, since demand is low the market for those items, trends don't work quite the same way but this post is a giant already so I'll deal with that another time.

Planetary Interaction

This is a brand new market, less than a month. It's also somewhat different because most of the items were previously available at a set price (set by the designers of the game). Looking at this market I am seeing a number of unusual dynamics going on (although broadly the pattern is starting off in with somewhat similar shape - prices are still rising to an "initial high" for most PI items). I was intending to write about PI in this post but this is quite long already so I will deal with it in the next day or two.