So... Monopolies

[TitaniumMan91]

Without knowing how they work, monopolies can be very good from the POV of the country they operate out of and more specifically, the government they may be deeply enmeshed in, especially if the country isn't actually ideologically committed to free markets or the best option for the citizens. I would hope there's downsides, but the downside might just be higher prices for that good in your market, making pops poorer than they'd otherwise be while we the player enjoy higher throughput bonuses, or maybe we just want the "right" pops to benefit, IE the Industrialists/Landowners/Petite Bourgeoisie at the expense of the wrong ones, especially Trade Unions and Rural Folk.

 

[cdub8d]

The monopolies should act, well, monopolistic.
And the main difference is pretty easy to explain, and the explanation works well within the economic model of V3 (where prices are a direct function of supply and demand).

A firm on a competitive market has no chance of changing the prices by manipulating output levels.
So when it wants to maximise profits with constant production costs, it has to maximise its outputs.
This behaviour is beneficial to the society as a whole, so the goals of the individual profit-seeking agents and the society at large (aka player) are aligned.

With monopoly, it's not the same.
A monopoly has
1) cash reserves and market power to buy out or suppress those who try denying it the next point
2) options to meaningfully inflate market prices by reducing output
That means that the effective level of production (the one that maximises its profits) for a monopoly is lower than the maximum it's able to get, and in that, its interests are not aligned with interests of the player.
That's what's harmful about them, and that's what I'd like to see implemented in game: monopolies actively trying to corner the market (by having the mechanical ability and desire to buy out independently-owned industries in their category) to jack up prices by shrinking the supply.

If it's unclear why reducing output can be beneficial for a monopoly, here's a spreadsheet:

	Monopoly's output	Non-monopolistic supply of the goods	Total supply of the output goods	Total demand of the output goods	Price of the goods	Input and labour cost per unit of goods	Profit per unit of goods	Total profit for the monopoly
Scenario A (maximise output)	1000	200	1200	1200	20 (base price)	18	2	2000
Scenario B (maximise profits)	400	200	600	1200	35 (+75%)	18	17	6800

Considering the time period (looking at the US specifically here), breaking up monopolies was a big deal... I would expect breaking up monopolies to be a good thing. In turn, monopolies could maybe get support from IGs/political parties which prevents them from being broken up. Then we could start to better model oligarchies.

 

[Life is Comedy]

We will need to wait for a DD to have an idea on what the developers mean to do. But I agree that I hope it's a double sided coin. And I agree that we should keep in mind, Monopolyies are especially bad for the consumer side, but not really for the Producer itself.

We as player tend though to play as the state by enlarge. Maybe hence a mechanic inspired fro EUIV monopolies could come handy, but adapted to V3:
A monopoly is linked to 1-2 IGs. Under free elections, a monopoly chooses 1 party to support. Those IGs become "involved". They get a "big" boost. But also a decaying modifier that prevents the IG / the leaders of the IGs to act against the monopoly. A reversed corruption after the fact instead of before the fact, just because of simulation limitations.

Might be too restrictive, but would help to slowly add systems that underly personal gain instead of state/society/class ones.

 

[IsaacCAT]

We will need to wait for a DD to have an idea on what the developers mean to do. But I agree that I hope it's a double sided coin. And I agree that we should keep in mind, Monopolyies are especially bad for the consumer side, but not really for the Producer itself.

We as player tend though to play as the state by enlarge. Maybe hence a mechanic inspired fro EUIV monopolies could come handy, but adapted to V3:
A monopoly is linked to 1-2 IGs. Under free elections, a monopoly chooses 1 party to support. Those IGs become "involved". They get a "big" boost. But also a decaying modifier that prevents the IG / the leaders of the IGs to act against the monopoly. A reversed corruption after the fact instead of before the fact, just because of simulation limitations.

Might be too restrictive, but would help to slowly add systems that underly personal gain instead of state/society/class ones.

IG should be concerned with laws regulating monopolies but not monopolies themselves.

Buildings are made of companies competing between each other. With the introduction of companies and now monopolies, the main beneficiary of a monopoly is the company controlling it, not the buildings in general. IG representing business interest should not be defending one or another monopoli but the general interest of their representants.

 

[FranklyJustNess]

I assume it's just a button or a checkmark, which prevents private investment from building the related buildings, and gradually makes the already privately owned levels of that industry move into the hands of the related company. Such a mechanic would be probably quite welcome, as nationalizing levels just to privatize them to your company for a big bonus is a bit weird and stupid. Not that something like this should be a DLC specific feature.

 

[IsaacCAT]

I assume it's just a button or a checkmark, which prevents private investment from building the related buildings, and gradually makes the already privately owned levels of that industry move into the hands of the related company. Such a mechanic would be probably quite welcome, as nationalizing levels just to privatize them to your company for a big bonus is a bit weird and stupid. Not that something like this should be a DLC specific feature.

That makes a lot of sense, except the gradually making the already privately owned levels of that industry move into the hands of the related company.

That should not be the case unless the market price is not +50% or more. Companies under a monopoly will not want to have depressed prices as Yurick has demonstrated.

The company will buy out those buildings and close the less profitable to keep prices high.

 

[Meanmanturbo]

Since this is coming in an international trade expansion, it is worth mentioning that the 'good' things (from the monopoly's perspective) can often come when a monopoly on an international scale is competing with non-monopolies in other countries.

The monopoly does make things expensive for its domestic consumers. But it can then invest that in making its products artificially cheap and sell at a loss abroad, aka dumping. This allows the monopoly to make the foreign manufacturers unprofitable, crashing them and buying up more market share within that country. That of course depends on the foreign country not clamping down with tariffs, but maybe that isn't politically viable for some reason (treaty ports, it's an unrecognized country, it's a much smaller competition, etc.). In any case it's worth considering in an expansion about international trade.

When it comes to competition and innovation, the world stage vs national thing is another thing that turns the tables on the traditional narrative. Centralizing capital more means that you can quickly and easily make those expensive investments to upgrade, while the diversified companies elsewhere lag behind. An example in the game's timeframe would be Germany's advantage with cutting-edge research while it had many cartels.

The South Korean Chaebols in present times comes to mind for the kind of monopolies that are really for competing abroad. Having a national industy concentrate and merge to compete internationaly isn´t that unheard of. One issues with companies now is that they cant buy out other owners making their throughput bonuses rather weak.

 

[Desseabar]

From a gameplay perspective, I'd say the downsides of a 19th century monopoly should be:

• Higher costs for the rest of the economy: their efficiency should drive competitors out of the market and out of business, reducing sell orders.
• Lower wages: monopolies should also be labor monopsonies, so eg Standard Oil should have lower wages than other industries by crowding out/outcompeting peers.
• Stagnation: monopolies get lazy with innovation and eventually get outcompeted (eg, continental and US shipbuilding should be faster to shift to diesel ships). This would be difficult without a PM rework - i.e., adding a transition cost to shifting PMs.

This would require more aggressive industrial downsizing, or at least letting companies acquire buildings from other companies.

 

[TheFlemishDuck]

Supposing that's really what you want, don't open with this:-

Well i dont agree, he was talking about perfect competition and i was of the opinion that it's a theoretical concept associated with liberal or neoliberal economics (atleast from my perspective) that kinda doesnt exist in reality. So the intent was to show that monopolies happen or happened in reality and that hence we should rather look at what we observe from history.

That said, Ludwig von Mises neither actually believed in perfect competition, While the Chicago school uses it as a model, so i admit the Von mises reference was indeed badly chosen.

 

[Cymsdale]

Let's be real, whatever downsides they have will be nominal at best. It's a paid for feature, so pressing the "Make Monopoly" button is always going to be the right choice over not pressing it because players will have paid real money to enable that button.

This is a disadvantage of having 'mechanic-focused' DLC.

I'm not a DLC hater. I can't blame Paradox for this, they have to make money, and I want them to (so they can keep improving the game). But it seems clear that if a DLC does not have a 'pay to win' feature somewhere in it, then it doesn't sell as well. CK2 was rife with this.

 

[Delterius]

The South Korean Chaebols in present times comes to mind for the kind of monopolies that are really for competing abroad. Having a national industy concentrate and merge to compete internationaly isn´t that unheard of.

That's why the competition argument can be a bit of a fallacy. The Chaebols are also known for exploiting the hell out of south koreans, but the truth is that whether a monopoly sponsors, benefits from or implements marketing innovations is historically contingent. It is down to the incentives put into place by the regulatory environment, the banking system and the form through which the government intervenes in the economy more directly. The whole japanese style of capitalism relies on consolidations of low profit (generally primary) sectors to make capital for investments in top tech.

The other problem is that the point about Innovation is currently moot. In Victoria 3 Innovation comes from the public sector, ie government owned Universities. You, the player, decides where to spend Innovation points on. Which means that regardless of who you play as you always start with something closer to the modern Research State, pioneered by the German Empire and elevated to its current levels of success by the post war economies of the US, Japan and China. The game also doesn't distinguish between fundamental technological breakthroughs, which tend to be government funded, and innovations in marketing, which tend to be the realm of private actors seeking new ways to deliver goods and services.

The devs are aware that Monopolies should have both desirable and undesirable effects. The desirable effects are clear. If you can, say, consolidate every Lumber Mill you and your pops own into a single Company then they can all benefit from the Companies' bonuses. Yet a straightforward (but complex) way to create undesirable outcomes would be to take away PMs from the player. At least where Companies are concerned. A Company could be afraid of producing more Lumber or any Hardwood at all if it leads to lower short term profits. This can be frustrating for the player since the AI will be the one doing that profitability calculus (and they might be completely dead wrong about it). But I think that given enough indirect tools to induce Demand then the player would have the ability to push the Company in the right direction, kicking and screaming if need be. The changes to international trade should help a lot as well.

 

[yurcick]

The devs are aware that Monopolies should have both desirable and undesirable effects

Can you quote them on that?
UPD: sorry, I must have missed that dev response

 

[Delterius]

Can you quote them on that?

dev diary thread

edit: no problem at all

 

[Woifee]

I think companies should not be formed by the player pressing a button but based on chance when some criteria are met. Also no hard limits on companies a country can have but maybe reducing the chance with the amount already existing.

In such a system more companies can form in the same economic sector with different multipliers affecting the buildings they own. They then compete on the market to sell products but also to buy up mills. If one is way more succesfull it should be able to buy the rival company as well. If monopoly is achieved tough the boni can turn to mali and they utilize their position in increase profit margins.

So the player has an incentive to favor the company with the better boni but also wants to avoid monopolies because of the negative effects.


Ideally companies then have a personality and agency as well and influence elections and lobby for some policies. Push for war goals if a play occure, maybe even put on pressure to the player to start plays to advance their economic intrests. Like openeing markets, protect investments in foreign countries etc.

 

[cdub8d]

I think companies should not be formed by the player pressing a button but based on chance when some criteria are met. Also no hard limits on companies a country can have but maybe reducing the chance with the amount already existing.

In such a system more companies can form in the same economic sector with different multipliers affecting the buildings they own. They then compete on the market to sell products but also to buy up mills. If one is way more succesfull it should be able to buy the rival company as well. If monopoly is achieved tough the boni can turn to mali and they utilize their position in increase profit margins.

So the player has an incentive to favor the company with the better boni but also wants to avoid monopolies because of the negative effects.


Ideally companies then have a personality and agency as well and influence elections and lobby for some policies. Push for war goals if a play occure, maybe even put on pressure to the player to start plays to advance their economic intrests. Like openeing markets, protect investments in foreign countries etc.

Companies interacting with internal politics is a great way to add some depth and better connect parts of the game together. It was also a big part of the time period!