Curious to how the 1.9 Trade re-work will... work?

[Metz]

Countries that export a certain good in a large amount for a sustained time should get a bonus via prestige and leverage. For instance, French wine was/is highly internationally known as was Chinese porcelain and Cuban tobacco. Since the game doesn't model where the goods come from (in terms of quality of craftsmanship) it could reward the players/AI at the bottom line of it all. The best way to do this is by having countries double down on their competitive advantages. From the opposite perspective, how do you convince a country to pay a little more for French wine than say Wallachian wine? Maybe by importing "prestigious" goods from these countries, your population gets a small reduction of radicalism and or a marginal bump to their SoL.


On a side note, maybe they can introduce logistics costs that are paid before the goods enter another port. Assign states a size modifier as some states are smaller than others. Each state the good passes through gets an additional cost added. Same for ocean nodes. Railways can reduce logistic costs as well as technologies for ocean shipping.

 

[Timewalker102]

I am suggesting that trade buy/sell orders are considered 1/2 in the price formula to make traded prices less elastic:

Market Price = 40 * (1 + 0,75 * ((1352.14 - 1893.5) / (1352.14)) = 40 * (1-0,75*0,40037) = 27,9888

Okay, I've actually looked at your calculation and I'm not convinced that this gets us what we want in terms of increasing trade volumes.

When we talk about increased trade volumes, the desired goals are two things:

1. We want to increase the revenue of our exporting industries
2. We want to decrease the costs our importing industries

Assuming that we don't build any additional buildings or change PMs, we know that the input goods and output goods are fixed. Therefore, the only way to increase revenue and decrease costs is to actually change the price itself. What we're maximising isn't necessarily just the trade profits themselves, but also the difference in equilibrium prices.

Your system, assuming a fixed cost to transport the goods, increases the maximum profit but it actually shifts the equilibrium prices away from converging. I might try to calculate this a bit more rigorously but here's some quick Desmos proof of this. You can see that if f (fixed costs) is greater than zero, the difference between the two prices is actually higher at the max profit in an "elastic" price calculation than in the current system. To make the difference smaller you have to actually set an elasticity l greater than 1, but if you set it too high you get the absurd scenario where profit occurs when the country with lower production exports to the country with higher production.

This is why I still think the best solution is to just keep trading until profit reaches zero, rather than treating trade centers as profit-maximising buildings (which no other building in the game is). Throw tariffs, trade center wages, dividends, and whatever transportation costs you want in it as a simple fixed cost, and just let it trade until prices converge (or more accurately, when the difference in prices is equal to the fixed costs). This does bring in fluctuation issues, but with good UI this honestly isn't a big issue (and as the game goes on, the effect of this is reduced).

 

[IsaacCAT]

Okay, I've actually looked at your calculation and I'm not convinced that this gets us what we want in terms of increasing trade volumes.

When we talk about increased trade volumes, the desired goals are two things:

1. We want to increase the revenue of our exporting industries
2. We want to decrease the costs our importing industries

Assuming that we don't build any additional buildings or change PMs, we know that the input goods and output goods are fixed. Therefore, the only way to increase revenue and decrease costs is to actually change the price itself. What we're maximising isn't necessarily just the trade profits themselves, but also the difference in equilibrium prices.

Your system, assuming a fixed cost to transport the goods, increases the maximum profit but it actually shifts the equilibrium prices away from converging. I might try to calculate this a bit more rigorously but here's some quick Desmos proof of this. You can see that if f (fixed costs) is greater than zero, the difference between the two prices is actually higher at the max profit in an "elastic" price calculation than in the current system. To make the difference smaller you have to actually set an elasticity l greater than 1, but if you set it too high you get the absurd scenario where profit occurs when the country with lower production exports to the country with higher production.

This is why I still think the best solution is to just keep trading until profit reaches zero, rather than treating trade centers as profit-maximising buildings (which no other building in the game is). Throw tariffs, trade center wages, dividends, and whatever transportation costs you want in it as a simple fixed cost, and just let it trade until prices converge (or more accurately, when the difference in prices is equal to the fixed costs). This does bring in fluctuation issues, but with good UI this honestly isn't a big issue (and as the game goes on, the effect of this is reduced).

Well, that formula was the first hypotesis, later in the same thread I discover that it won't solve the problem if prices were to decrease as that will reduce trade.

All in all, what I want is a two different formulas for price calculation depending on the quantities of traded goods.

a) traded goods are below compared to local supply -> trade affect less on prices

b) traded goods are more than local goods -> supply/demand works as it is now

 

[shoebird]

The idea is to keep prices high for longer by requiring more quantities in the market to lower prices.

What would that accomplish, aside from using more convoys and increasing revenue from tariffs? Quantities itself doesn’t matter in Vic3, only price.

For trade to work that advantage piece needs to be baked into each country and unique to that country, Generalist goes into a good example of how Arcana cards can do this within realms of ether.

Are you proposing that a certain country is good doing that because it is a certain country? This is not realistic. Many countries have developed competitive advantages that they did not have before, to the point of flooding the markets of those that had the competitive advantage before. Sometimes very fast.

Rework the economies of scale throughput modifier so that it's exponential or maybe even starts negative

The problem, and it is a general problem of increasing competitive advantage, but specifically for this, is that small countries might end up not having any economy of their own and just import everything from larger countries with massive economies of scale bonuses, as those can man more levels because of larger population.

This is so because trade balances are not implemented in the game mechanics, so any country has infinite money to import everything. This is something that will need to be addressed if trade is made more important with more routes and larger volumes, IMO. It would also fit nicely with foreign investment.

 

[IsaacCAT]

What would that accomplish, aside from using more convoys and increasing revenue from tariffs? Quantities itself doesn’t matter in Vic3, only price.

Reduce the effect of MAPI on trade. This is what I would try to increase trade quantities as they were before the introduction of MAPI that increases the viability of local buildings by schewing prices to local supply.

I agree that price is the most important in VIC3 but price is function of quantities, thus you play with them to get the desired price.

The whole point players are critizicing about trade is that there is not enough of it and tariffs are too low.

 

[shoebird]

Reduce the effect of MAPI on trade.

Why would you want. MAPI represents transport cost. Transport cost are inherent to trade.

This is what I would try to increase trade quantities as they were before the introduction of MAPI that increases the viability of local buildings by schewing prices to local supply.

But you are reducing the sensitivity of prices as a function of quantity. So you increase the quantities, but for what I understood the prices don’t change by that much until quantity is large enough. At the end the effect on prices would end being the same that now, only that using larger amounts of goods. Unless that you are proposing that the inelasticity only affects the price on the importing market and not on the exporting one. But that would be strange. And in any case it could end with the original situation at release, when goods could be more expensive on the exporting market than on the importing one, something that caused a lot of complaints about “the AI is stealing my lumber”

The whole point players are critizicing about trade is that there is not enough of it and tariffs are too low.

Well, it is going to be always lower than in reality, because in reality, for instance, country A imports cars from country B and at the same time exports cars to country B. Vic3 trade only represents net trade, so if imports from B are larger than exports to B, then only a route from B to A is represented, so the volumes and the tariffs payed are going to be lower than irl.

 

[IsaacCAT]

Why would you want. MAPI represents transport cost. Transport cost are inherent to trade.

But you are reducing the sensitivity of prices as a function of quantity. So you increase the quantities, but for what I understood the prices don’t change by that much until quantity is large enough. At the end the effect on prices would end being the same that now, only that using larger amounts of goods. Unless that you are proposing that the inelasticity only affects the price on the importing market and not on the exporting one. But that would be strange. And in any case it could end with the original situation at release, when goods could be more expensive on the exporting market than on the importing one, something that caused a lot of complaints about “the AI is stealing my lumber”

Well, it is going to be always lower than in reality, because in reality, for instance, country A imports cars from country B and at the same time exports cars to country B. Vic3 trade only represents net trade, so if imports from B are larger than exports to B, then only a route from B to A is represented, so the volumes and the tariffs payed are going to be lower than irl.

MAPI does not represent transport cost, that is infrastructure. MAPI represents local prices vs global market prices (mismatch of information).

Yes, inelasiticity for trade supplied goods only affects the importing market and only if trade imported goods are lower than local goods. Unless I am mistaken, every market has its own prices and it is always the case that goods have different prices in different markets.

As far as I know, you can import and export the same good to the same nation, however, the trade volume is function of prices in each market affected by tariffs (if applicable).

https://vic3.paradoxwikis.com/Market#Route_size

 

[Timewalker102]

The problem, and it is a general problem of increasing competitive advantage, but specifically for this, is that small countries might end up not having any economy of their own and just import everything from larger countries with massive economies of scale bonuses, as those can man more levels because of larger population.

I think this is fine with me. Players will have to pull a Seretse Khama and specialise HARD to survive as a minor country, but this is a much more fun game loop than the same old "just build tools and iron bro" loop of today. The bigger concern is honestly AI but let's be honest, Paradox AI is always going to be a little bit slow

This is so because trade balances are not implemented in the game mechanics, so any country has infinite money to import everything. This is something that will need to be addressed if trade is made more important with more routes and larger volumes, IMO. It would also fit nicely with foreign investment.

Why would you need this right now? Victoria 3 doesn't have any monetary policy mechanics and it probably won't for quite a while. I think it would be nice to eventually link up foreign investments to trade balances and create a quasi balance of payments mechanic (as long as it's both engaging and not too anachronistic), but it's not really a necessity at this stage.

 

[shoebird]

MAPI does not represent transport cost, that is infrastructure. MAPI represents local prices vs global market prices (mismatch of information).

But infrastructure is only a bottleneck, representing that there is not enough capacity to transport goods out of the state, but not the cost of transport. My understanding is that at least part of the MAPI mismatch of prices is due to transport cost. In any case if there’s mismatch of information with other states , why not with other countries?

Unless I am mistaken, every market has its own prices and it is always the case that goods have different prices in different markets.

Yes, but I think that with what you propose the importing market could end having lower prices than the exporting market, which is something that happened with the original design of trade at release, precisely on purpose to increase trade, and raised a lot of complaints. People didn’t liked that the AI siphoned their cheap goods out of market making them more expensive than in the AI country.

As far as I know, you can import and export the same good to the same nation, however, the trade volume is function of prices in each market affected by tariffs (if applicable).

Yes, but I doubt both routes are profitable and large. Nearly all of the cases one of the routes would be profitable and the other not. So at the end almost only net trade is represented.

I think this is fine with me. Players will have to pull a Seretse Khama and specialise HARD to survive as a minor country, but this is a much more fun game loop than the same old "just build tools and iron bro" loop of today.

You misunderstand me. It would make things easier because you can import everything, so all the goods are super cheap in your market, your pops working in trade centers earning good salaries because trade routes are profitable, so super high SoL and tax revenue. And the only thing you need to build are ports, not need to bother building an economy. This is because your country has infinite money to buy from abroad, as trade balances are not a thing. Irl if you import more than you export you either need to attract foreign investment, or ask for foreign debt. Otherwise you run out of money and can’t import more. This happens regardless of countries having the same or different currencies. But in Vic3 money is created out of nowhere. If a trade route is profitable it will create money. So you can import as much as you wish with the only limit being convoys.

 

[IsaacCAT]

In any case if there’s mismatch of information with other states , why not with other countries?

Because other countries have their own price set by their market and own MAPI.

Yes, but I think that with what you propose the importing market could end having lower prices than the exporting market, which is something that happened with the original design of trade at release, precisely on purpose to increase trade, and raised a lot of complaints. People didn’t liked that the AI siphoned their cheap goods out of market making them more expensive than in the AI country.

That can happen until quantities imported become significant then it will revert to what we have now.

If the exporting nation is very small compared to the importing nation it could be the case that the exported goods are very significant to the exporting nation (increasing prices) but because the importing market is so big the imported goods will not decrease the prices, keeping them higher due to my suggestion. So yes, in this case there would be a pull of goods from one nation to the other.

But that would be benefiting the exporting economy that will have potential for growth.

 

[Prob32]

Why would you want. MAPI represents transport cost. Transport cost are inherent to trade.

MAPI isn't transport costs its incomplete pricing information represented by localized markets- this is why it's improved by Stock Exchange representing more efficient pricing information.

Infrastructure is transport costs which is why it varies by building type

 

[Prob32]

Comparative advantage isn't too hard to solve.

I disagree, I play alot of Multiplayer, actually primarily multiplayer. More than anything else players always build wood>iron>coal>tools>steel almost entirely in that order regardless of which country they play. This is because these are the most efficient per construction point while being simultaneously being eligible to be owned by Financial Districts and Company Headquarters. I think Multiplayer is a good template for this because it highlights how prevalent the same play patterns are, it also shows that it's not an ai issue.

The way I would solve comparative advantage is (from easiest to implement to hardest):

1. Forcing AI to value throughput more (I don't think it really understands that the economy of scale throughput bonus when constructing a building is actually worth double)

Forcing AI to understand throughput will just make the AI build more wood>iron>coal>tools>steel. Even if they don't build these resources, the player will because it's always the most efficient thing to do.

2. Way more terrain throughput modifiers

A)
We already have a fair amount of these, and they don't work. Take Perm for example, a great wood state because of its logging throughput bonus but located in the center of the country. In an ideal state game state wood in perm does not become competitive against wood in western Europe and the new world until a strong transport network is developed to access it.

B)
A lot of European and American states have similar terrain modifiers on coal and iron for example; but even amongst these economies there were large differences in their ability to get coal profitably to market but this has zero representation in game.

3. Making Qualifications much harder to get (straight up nerf Promote Social Mobility for one)

100% they almost did this for 1.8.2 then reversed it sadly

4. An inventions system similar to Vic2

Never played Vic2 but sounds interesting- I think the latest development companies in HoI4/MIO type work is interesting for companies. More technology and production methods for sure will help. Company specific PM's will help, and maybe some stellaris style randomized access tech.

5. Rework the economies of scale throughput modifier so that it's exponential or maybe even starts negative

I'm not sure how this will help if everyone is following the same play pattern.

 

[Prob32]

Are you proposing that a certain country is good doing that because it is a certain country? This is not realistic. Many countries have developed competitive advantages that they did not have before, to the point of flooding the markets of those that had the competitive advantage before. Sometimes very fast.

Comparative advantage has three pillars needed to implement correctly

1. Wages - We already have this though could be better https://forum.paradoxplaza.com/forum/threads/labor-market-re-work.1724312/
2. Technology & Capital - We do have tech differences but the buckets are so large almost everyone is on the same tech the whole time, there's also no cost to transition production method types which means capital access is not as important
3. Geography - The largest missing component and what truly hinders our ability to have comparative advantage is the fact that there are no simulated transport costs meaning Perm and and Kursk can get coal to Kiev at the same rate to help produce steel. See my signature for some suggestions on how to fix

 

[Prob32]

Countries that export a certain good in a large amount for a sustained time should get a bonus via prestige and leverage. For instance, French wine was/is highly internationally known as was Chinese porcelain and Cuban tobacco.

Yes 100% but I think it should be the trade centers themselves that start to get benefits from things like less convoys and perhaps better pricing? Long term durable trade agreements are a thing.

On a side note, maybe they can introduce logistics costs that are paid before the goods enter another port. Assign states a size modifier as some states are smaller than others. Each state the good passes through gets an additional cost added. Same for ocean nodes. Railways can reduce logistic costs as well as technologies for ocean shipping.

I think an internal trade center model could work https://forum.paradoxplaza.com/forum/threads/internal-trade-to-solve-logistics.1725160/

 

[shoebird]

Because other countries have their own price set by their market and own MAPI.

Well, goods need to be distributed in the other country too. Also the importer will suffer from incomplete information about the market of each one of the states in the other country.

That can happen until quantities imported become significant then it will revert to what we have now.

If the exporting nation is very small compared to the importing nation it could be the case that the exported goods are very significant to the exporting nation (increasing prices) but because the importing market is so big the imported goods will not decrease the prices, keeping them higher due to my suggestion. So yes, in this case there would be a pull of goods from one nation to the other.

I see, but then what you propose only has an effect when trading small quantities, so for small countries, game start or when introducing a new product, which is needed. But it doesn’t solve the problem with relatively large trade routes not growing, which is one of the reasons of trade not being important enough.

MAPI isn't transport costs its incomplete pricing information represented by localized markets- this is why it's improved by Stock Exchange representing more efficient pricing information.

Infrastructure is transport costs which is why it varies by building type

I don’t fully agree with this. I mean MAPI includes incomplete pricing information, ok, but I think it also includes transport cost.

But what I don’t agree at all is on infrastructure representing transport cost, because it doesn’t affect price of products, neither business or consumers pay for it. It just represents infrastructure, i.e. having a road or a train so that goods can be moved at all, not the cost of moving them.

 

[Prob32]

I don’t fully agree with this. I mean MAPI includes incomplete pricing information, ok, but I think it also includes transport cost.

@IsaacCAT Did a big explainer thread on this a few months(October, November) back maybe he can link the full explainer.

MAPI isn't supposed to simulate transport costs at all, which is why it varies based on market information technology such as stock exchange. It represents how local pricing information is more accurate and there is pricing misinformation that happens through middle men during this time leading to market inefficiencies. Remember at game start the fastest way to get information around the world were things like the Pony express. If you're Abe Lincoln and chop wood in IL to sell in NY because you heard there was a good price for wood- by the time you got there the price would be different.

Generalist Gaming also talks about this in his YT video on Freight as a good here:

But what I don’t agree at all is on infrastructure representing transport cost, because it doesn’t affect price of products, neither business or consumers pay for it. It just represents infrastructure, i.e. having a road or a train so that goods can be moved at all, not the cost of moving them.

Transport costs within the game are abstracted to say that they're "Priced in" to every businesses cost. Meaning that there is no need to simulate local transport costs as every building is assumed to pay them at an equivalized rate. The amount of need for transport is fixed based on the building type represented by infrastructure where the government pays the transport costs when it builds a railroad. Note that this abstraction also means there is zero increasing demand for Infrastructure as throughput increases.

Transport as a good is supposed to represent the automation power of the railroads in reducing labor demand which is why only industries (Resources) that benefitted immensely from railroads reducing labor have it as a labor saving PM option.

The point of this is to explain what the mechanics are intended to represent, not a defense of them. Internal trade is the most disjointed mechanic system in the game at the moment, especially considering the devs dropped their entire internal trade mechanic system of infrastructure rail capacity prior to game launch: https://forum.paradoxplaza.com/forum/developer-diary/victoria-3-dev-diary-10-infrastructure.1485696/

Ideally this will come with the trade re-work as we have: Market Access, Market Access Price Impact (MAPI), Infrastructure, Transport and Convoys working simultaneously in this trade cost space.

I've got a few potential suggestions on how internal trade should work in my signature.

 

[Prob32]

For the record I think the most complete way to solve trade in a re-work would be to have trade centers run only local to local market routes- this would effectively give them a strong advantage because they would be avoiding 50%+ of MAPI costs. I.E. South Carolina trading directly to Midlands - local to local pricing with a small MAPI multiplier based on the trade center itself running the trade which reduces overtime and volume of that trade route.

To implement this effectively you'd need to:

• Have internal trade routes
• Have land nodes that allow internal trade routes and international ones

This would always give trade routes a competitive advantage over goods just traveling through non-established importer/exporters within an economy. It would also allow for effective comparative advantage between fabric from South Carolina versus India going to the Midlands. It also uses existing game systems apart from land nodes.

The issue here is that trade routes are currently some of the least performant operations currently in the game and this system depending on AI defines would mandate at least one trade route in each state to the market capital at minimum.

 

[Citizen Caen]

The problem, and it is a general problem of increasing competitive advantage, but specifically for this, is that small countries might end up not having any economy of their own and just import everything from larger countries with massive economies of scale bonuses, as those can man more levels because of larger population.

Thats just an accurate modeling of reality lol
Just ask Latin America

 

[Prob32]

View attachment 1242053
Thats just an accurate modeling of reality lol

I think smaller countries should have some ability to scale in a very niche way. So an ideal system is that there is sufficient technology and innovation system such that small countries can choose to scale one companies technology type far down a PM tree & pair it with sufficient capital to make it competitive. Especially if it can pair that with a good export trade route.

 

[IsaacCAT]

About MAPI and infrastructure confusion on what represents transport costs in the game, devs have been pretty clear but I understand the confusion.

Market Access Price Impact does not represent physical access cost to get your goods to the market but access to knowledge of national market prices and instead use of influenced local supply prices. This is also the reason why MAPI changes with information technologies and not with the use of transport technologies. Also MAPI changes for all buildings and states at the same time.

On the other hand, infrastructure is function of the Building Level, so there you have the increase of usage due to transport of goods produced, the higher the building level the more infra it uses:

Beyond that, the wiki definition of infrastructure is pretty clear:

Infrastructure - Victoria 3 Wiki

vic3.paradoxwikis.com

I would like to have regional markets and infrastructure be not function of building level but trade routes moving goods between those regional markets using actual infrastructure depending on the geography that will require infrastructure projects. But those are my wishes, not how the game works right now.