Grand Exchange: Economy Change?
s announced in the "Behind the Scenes" of this month, we're going to get a new trading system! This Grand Exchange will be located in Varrock and, as most people on the official forums assume, will work pretty much as a new system to find buyers for their goods. It looks like Jagex wants us to swap the medieval market system (going to a specific place to buy what you need or to sell what you want to get rid of) for something more modern. Instead, we'll get a market which is like stock markets used to be until ten or fifteen years ago: a place where you can drop your shares to be sold, and where others can come to buy them from you. Unfortunately, Jagex has not announced anything more than that we can call this new system an "exchange", it will be based in Varrock, and both free players and members can use it. Also, it will be one big system which works across all worlds.
It doesn't sound that bad, leaving your precious items to an NPC, with the instruction to sell it for a certain price. Quite easy for skillers who want to make the money back they spend on training: they can leave the final products out there for someone willing to buy them, while continuing training themselves. Also, you will not be limited in the time you can keep items on the market. That sounds great to me, as I live in the Netherlands, and most players are online while I'm sleeping. I'd love to leave my items on the market when I go to bed, to find a nice amount of gold in my bank when I log on next morning. Last but not least, this will make all Runescape players a bit more equal: we will all be able to search the entire market for low priced items. But... Will there be low priced items after this major change? Time for some philosophy about what will happen to the Runescape market.
Realize one thing: this new system will have a big impact, the number of people selling items in banks, Falador Park, and Varrock Square will drop extremely fast. I am sure the Grand Exchange will be a more efficient way to buy and sell items. Also, there might be an anti-scam function built in: if all players sell their wares through the Grand Exchange, it is easy to build in a system which calculates the average market value of items. So there might be a system which warns you for typos in the price of your goods. If you accidentally tell the Grand Exchange to sell your whip for 150K instead of 1.5 mil, it can warn you that the average price of the item is 10 times as high as the price you want to sell your whip for. Also, it should be impossible to lure the GE by offering 15004gp instead of 1500K. (I'm told that if you don't look good enough, a "4" looks like a "K", this is a quite common way of scamming).
Ok and what will happen to the prices of items? Three options: they go down, stay the same, or rise. With one flat market for all of Runescape, merchants can constantly look out for good deals, buy the cheapest items, and immediately put them up for a higher price. So the average buyer, who just wants some coal to train his smithing, will find himself confronted with higher prices than what the miner gets paid. Of course he can stay on the lookout for a good deal, but not many people will do that. Instead of what is claimed on the forums, there will probably still be a place for merchants in the new market system. Things will be even easier for them!
Of course, with lots of people using the trick I just explained, there is more competition, so the prices merchants charge will have to be competitive. But on the other hand, the amount of items you can buy and sell is less based on how much time you have, and more on how much money you can invest. Something else merchants can do to replace their old source of income, is the real stock exchange work: buying items, and speculating on the price at which you will be able to sell it. Just like the rares market, except that you have to aim on the short-term trades. Like: you buy a load of magic logs for 1k each, next day; you sell them for 1050gp each. A profit of 5%, quite small, but again: the scale of the market will be much bigger, and the amount you buy won't be limited by the world you're on, just by the amount on sale and your money.
Those are pretty much all possibilities, but again, what will happen? As long as we don't know anymore details on the Grand Exchange, it is hard to say how the market will develop. So, my expectations are based on guesswork, and the almighty experience of history.
Most likely, the normal marked prices will also be the "introduction prices" on the Grand Exchange. I am quite sure merchants will try to change their role from skilled traders to investors; merchanting is not as easy as you might think. You need to keep track of the prices, you must be patient, and also keep and eye out for new business opportunities. I'm not even talking about how to persuade your trading partner to agree with the deal you want. And, there is quite a lot of competition.
Back on topic: merchants will try to change their role to that of investors. With no time limits for selling their items, they can concentrate on buying cheaply and setting the selling prices. There are two kinds of merchants, the rich and the poor ones. Now the rich ones are going to make the biggest money, because they can buy larger amounts of items, and therefore make more money in an absolute way. However poor merchants should make about the same percentage profit. Also, and that counts for all investors, they can let their money work for them while they're offline or not working on their business as well.
A likely day scheme of a new-style merchant could be: one our business, then doing something else (such as combat training). Next day, he can collect his money, check which items are sold, and eventually tweak some prices before investing his profit in new wares.
Overall, I don't think the General Exchange will change the Runescape economy dramatically, however, unless you are willing to invest time, the cheap buys may be over for a lot of us, with professional merchants taking the best deals away. I don't expect dramatical price changes as well, however the change to a whole new system of trading might cause some kind of crisis. Maybe there will be a price drop or raise for a couple of weeks, however the market is very likely to stabilize sooner or later. The reason is simple: at some point, people will refuse to work for a very low payment, so there will be a temporary shortage of goods, which lets the prices go up and stabilize, so people will be willing to sell their products again. I believe that the current prices for raw materials are perfect: they are high enough for the workers to be willing to spend time on getting them, but low enough for the customers to be willing to pay such amounts of money for it. With that, I'd like to end this analysis of what the Grand Exchange will do to the Runescape economy: nothing big.
