We have mentioned on a number of occasions that we are not happy with the way trade works in Victoria 3. It is unreliable, overly fiddly, and inherently inefficient since the introduction of Local Prices and Market Access Price Impact in 1.5. Establishing any kind of long-term trade relationship with another country is almost impossible due to the constantly shifting market conditions, and on top of all this the system exists in a confusing limbo where all trade routes are established and paid for by the government (via convoys) while the profits usually go into the pockets of private owners. Many of these issues are inherent to the way trade routes work, and as such aren’t easily fixable within the confines of the current system - there really isn’t a way to create a reliably profitable trade route with another market when you have no control of the price of the traded good in the other market.
For this reason, we have decided to start over from scratch. The old system is completely gone, and in its place we will have not one but two new systems - one which simulates private, autonomous, profit-driven trade, and another which handles strategic trade deals between nations. Today we’re going to talk only about the former, so while reading all of this, bear in mind that you’re only seeing one half of the coin. Direct trade deals between governments will very much still exist in 1.9, they just won’t be tied into Trade Centers and private profits. But enough with the caveats, let’s get to the point.
World Market & Trade Centers
Enter The World Market. Those of you familiar with Victoria 2 will immediately recognize the name, and might even have assumed from the title of this dev diary that we’re replacing the national market system in Victoria 3 with the global one in its predecessor. This is not so. The World Market in Victoria 3 is not where pops and buildings buy and sell goods, but rather where autonomous trade takes place, and every good traded in the World Market has a World Market Price based on its amount of exports versus imports. You can think of it as existing at a ‘top layer’ above the national markets, though this is not a completely accurate picture as you should soon understand.The World Market in 1836 in the current build - remember that everything is very much WIP!
So then, how does trade with the World Market work? As with the old trade route system, Trade Centers are still the principal drivers of trade, but the way you interact with them has been turned on its head. Instead of being a building that appears after a trade is created, you now build Trade Centers to create Trade Capacity in States, which allows those States to trade with the World Market. Each Trade Capacity allows for a certain quantity of a good to be imported or exported (the amount varies per good). Imported goods are purchased from the World Market and sold in the State, and so they are profitable when the goods are cheaper in the World Market than the State, with the opposite being true for exports.
There’s a bit more to this, which we’ll get into when we talk about Trade Advantage, but the key thing to remember is that trade uses local state prices, which means it no longer suffers from the inherent inefficiencies of the old system, which was always penalized by Market Access Price Impact. It also means that the location of Trade Centers matters - it’s more profitable to import Luxury Clothes into a state with a large number of wealthy Pops, as an example.
This Trade Center in Brandenburg is making a decent profit importing cheap dyes and liquor while exporting some overproduced goods in the Prussian Market, but still has plenty of free Trade Capacity with which to expand its operation
Trading in Trade Centers happens autonomously, with a number of weekly adjustments based on the ‘Weekly Trades’ value created by the Trade Center, in which they will increase or decrease trade volumes to create profit for themselves. While this process is automatic and autonomous, it’s not completely out of player hands, as you can heavily influence Trade Centers through Tariffs and Subventions, but more on that in a little bit. Unlike in the old system, Trade Centers are not reliant on Convoys or any other government-produced resource. Instead they purchase Merchant Marine, a new type of goods created by Ports (which are no longer government-only buildings). Right now the amount of Merchant Marine consumed by Trade Centers is static per level, but we are looking into making it dependent on geographic distance to trade partners. As an additional note, both Trade Centers and Ports can now be constructed/privatized/owned by Ownership Buildings.
A detailed look at the Brandenburg Trade Center’s imports and exports. You can see the revenue, price difference, relative trade advantage and principal trade partners for each good.
World Market Location
Switching to talk about the World Market itself, you might well ask, ‘So where is the World Market located?’. Conceptually, what we say to this is ‘The world market exists in the sea’. In other words, once you have access to the sea you also have the ability to trade on the World Market, though of course it’s a bit more complicated than that. To explain more in detail, I first have to tell you about something which already exists in the game, but is presently quite hidden: Market Areas. Market Areas are ‘chunks’ of a market, consisting of a number of states that are all connected by land or by straits. To give you an example, the Spanish Market has several market areas: One for Spain itself, one for Cuba, one for Puerto Rico, another for the Philippines and so on. Prussia, conversely, only has a single Market Area which contains not only Prussia but all of the states of the countries in the Zollverein.In order to trade with the World Market, a Market Area must have at least one Port, at which point a World Market Hub will be established. When there are multiple ports in a Market Area, the Hub is chosen based on factors such as port level and State GDP. Hubs are not completely static, but do not generally move around unless a much more suitable candidate State emerges to eclipse the old Hub State.
As the largest port in Spain, Western Andalusia is also the World Market Hub for its capital Market Area
Landlocked countries, however, are not left out completely in the cold when it comes to the World Market. Asides from being able to utilize national trade deals (which as I said before we’re not covering today) they can also negotiate Transit Rights with a foreign nation in order to be able to trade through their World Market Hubs. For example, Switzerland could negotiate Transit Rights with Austria to be able to trade through Venetia, or with Prussia to be able to trade through one of the German ports. We will return to talk more about World Market Hubs in later development diaries when we cover subjects such as blockades, but for now we should continue. I will add as a final note that one design problem we have currently identified with World Market Hubs and Market Areas is that it doesn’t make too much sense for huge Market Areas (such as Russia) to only have a single Hub, and this is something we are currently exploring solutions for.
While the World Market ‘exists in the sea’, that doesn’t mean that we simply ignore where your exports are going as soon as they get loaded onto a ship. Not all trade partners are equal, and it makes little sense to get the bulk of your Clothes imports from an overseas partner if your demand could be met by a closer source. As such, each Trade Center has a preference weight for every other Trade Center based on factors such as interests, relations, diplomatic agreements and of course geographic distance, and will trade more with higher-weight Trade Centers and less with lower-weight ones.
Placeholder interface for tracking trade going through sea nodes. This will be replaced by a much better interface with better tooltips before 1.9 is released.
Trade Advantage
I have mentioned Trade Advantage at several points during this development diary, so I figure it’s high time I explain it to you. I already explained that there is a World Market Price for each good which is high when imports exceed exports and low when exports exceed imports, and which is compared to the State Price when determining how much profit a Trade Center can extract from its trades. However, this is a bit of a simplification - the World Market Price is the average price for imported/exported goods, while the actual price is modified by a Trade Center’s relative Trade Advantage to its competitors.Trade Advantage is calculated for each Trade Center, for each good, in each trade direction. As an example, a Trade Center in Lancashire will have a certain amount of Trade Advantage for exporting Fabric, which will be different from its Trade Advantage in exporting Coal, and also different from its Trade Advantage for importing either Fabric or Coal. Trade Advantage is multiplied by the amount of traded units, and then compared to the Trade Advantage of all other Trade Centers trading the same goods in the same direction. The higher a TC’s share of global trade advantage compared to its share of global trade volume, the higher its relative advantage, which in turn translates into a better price. Advantage is a zero-sum game - the average price on imports/exports is always equal to the World Market Price, so any improvement on prices a Trade Center gains always comes at the expense of its competitors.
If that explanation sounds confusing, the key takeaway is that high advantage equals better prices, and in turn, the ability to capture a larger share of global trade. Advantage is gained from a variety of factors, such as Trade Center level, Interests in relevant markets and Trade Agreements. Regional economics also play a role - the higher the Market Area’s share of global production, the higher its export advantage, and vice versa for consumption/import advantage.
This Trade Center in Virginia has high Trade Advantage for exports of Iron, Fabric and Meat, resulting in more favorable prices. Note that the numbers here don’t currently add up due to a bug.
Interacting with the World Market
Changing the focus of the discussion a little bit, something I feel I have not always made clear in the past when we change systems to work in a more autonomous/automatic way is how you are expected to interact with it. Under the old trade route system this was clear enough: you as the player were the sole arbiter of trade for your country, for ill or good. In the new system (and I will remind you again that I am only talking about the World Market here, not country-to-country trade deals which we will cover in a later dev diary) you are expected to make strategic-level decisions to capture global import and export shares.As an example, playing as Sweden, you have a lot of potential to produce Iron - far more than you could ever use domestically with your limited starting population. A natural course of action then might be to build up your Trade Capacity and try to maximize your Trade Advantage for exporting iron, leading to greater export volumes and in turn creating favorable conditions for expanding your iron production. This maximization of Trade Advantage can be done in a number of ways, for example by signing Trade Agreements with key importers or by squeezing the competition by unequal treaties on them (more on that particular point later, for now it will remain mysteriously unelaborated on).
Another key tool in your strategic trade arsenal is Tariffs and their newly introduced counterpart, Subventions. Tariffs are of course already in the game, but now become much more important as they are the principal way by which you can directly influence the decisions made by your Trade Centers. Where previously, Tariffs for a particular good could only be set to ‘Import Focus’, ‘Export Focus’ or ‘No Focus’, Import and Export Tariff levels are now set separately, meaning that you can throw up tariff barriers in both directions if you’re feeling particularly protectionist about a good.
Your Trade Law now sets your Maximum Tariff/Subvention rate, which each Tariff/Subvention level applies a multiplier to (for example, High Tariffs apply 50% of the maximum rate)
Tariffs, just as before, collect a fee from your Trade Centers for each good of the relevant type exported/imported, and so effectively serve to reduce trade volumes of that good by making it less profitable to trade. Subventions function in the exact opposite way, paying the Trade Center a certain amount of money for each unit traded in the directed direction, and can be used in a variety of ways, such as subsidizing a critical import of military goods, or to muscle out the competition for one of your principal exports.
This almost-a-slider interface for Tariffs and Subventions is 100% placeholder and will be replaced with something better before release, but gives you an idea of the expanded options available.
Alright, I think that should suffice to give you an overview of the World Market. I do want to emphasize that this feature is still under development and there are some key questions we have not yet figured out, such as the issues with over-large Market Areas. Before I sign off, I will leave you with a couple screenshots from an end-game World Market in the current build:
