Economy: Product Nets 2/3

Note:  Apologies for the enormous delay - some sad family news kept me occupied after my last post, but now back up to speed - hope to do the specification by the end of the month now


In the last substantive post, we began looking at product nets and how costs propagate between interrelated items.  We left several things hanging:  transport and energy costs, company definitions, demand and multiple economies.  I'm going to cover all but the last (somewhat cryptic) item in this post, and very shortly post up the remainder.  Since these are somewhat minor extensions to the basic concept, the description will be necessarily brief, but if you're happy to stick with me after these awkward interruptions, I'll be glad to clarify anything you have to ask in any comments to this!


Company Definitions
The product net gives us a set of things that people or companies could buy.  Unfortunately, that's not enough for the simulation to do anything other than generate companies selling random combinations of goods.  That might be fine - even desirable - in a simple product model.  However, if you're at a lower level of definition, you might be irritated to find a shop called "Smith and Sons" selling brocolli and socks under one roof!


This is simply done - we add to our net definition a set of company types that can be defined with the kinds of the products they sell, and whether that's to individuals, other companies or both.  When the simulator decides that a new company is going to be established, it chooses from these categories and arranges for that company to be set up.


I imagine that other attributes and properties will be useful to help control the simulation.  I'm not going to define these now, but will leave expansion open-ended within the simulator.


Demand
Demand is also partially specified as part of the product net, although the wider definition of demand within WorldSim is probably a subject for another post.  Lovely as it would be to simulate individual demand, this is too high a computational burden for us to bear until computers get a wee bit faster.


So instead, we'll be centring demand on the social groups I talked about in an earlier post.  This will allow us to specify product demand by individual groups.  Specifically, we need properties for:

• frequency of purchase - how often do we need to buy this?
• necessity - some kind of scale to indicate how necessary this is to possess. Bread might be 100% necessary, for instance, whilst a Ferrari would be maybe 1% necessary
• desirability - another scale to indicate how much a social group desires this.  This needs to be sensible - a poor man might *want* a fast sports car, but he has no *desire* to bankrupt himself buying it

There may be others as well, and I'm open to other suggestions.  The use of social groups will allow us to exploit other variables such as average income to determine prices and demand.  This does mean, however, that a product net might end up tied to a particular set of social divisions - this could be awkward, but I think it's manageable.


We now have a way of defining purchases by individuals, can determine their demand and so begin the calculation of the supply-and-demand model that will drive the simulation forward.  There are quite a few loose ends though - how do products move around, and what ongoing costs of ownership might we need to simulate?  


We'll only worry about energy use for this latter portion.  The other aspect is transportation and the associated cost of moving things around.  Since the player can directly control transport and influence its cost, this can add an interesting additional dimension to the economic model of the game.


Transport and Energy
Energy for the purposes of this discussion can simply be thought of as electricity.  Something generates electricity, it is transmitted and then something uses it.  Products within a net can require energy, and this will feed into their base cost.


Each source of energy will require definition, including the minimum cost of producing a unit of energy.  Demand will cause the cost to vary according to the laws of supply and demand.  The energy cost according to the product net will be a weighted average of all the available supply prices.  This doesn't require energy sources to be specified within the product net, but the net needs to have an awareness of this as a raw material.


This allows us to start considering realistic effects - we might have energy sources that produce lots of pollution, but produce cheaper electricity than their clean or renewable alternatives.


Transport is not included in the product net directly, since it relies on geographic quantities that are obviously not known before the game begins.  This cost is added by the companies that supply the goods within the net - this will introduce another pricing differential between companies.  Technically, the code will need to link these costs together to allow a market to form correctly - within the simulation, the product net will therefore co-exist with the company definitions.


Next steps...
We're almost there for economic drivers, but there is another dimension to add before we can wrap up.  This is the concept of alternative or multiple economies.  We'll see this in the next post...


Fred