Greedy Goblin

Thursday, July 21, 2016

Protective tariff: Cooking honey for 525

Another wonderful example of the limited economy of Black Desert Online: Cooking Honey. This is a cooking material (go figure!) which is used in various recipes. It's gained by placing a worker in Alajandro farm.

The problem is that its price minimum is 525, making it one of the most expensive basic materials, beaten only by Acacia, Fir and Cedar, maybe Coal. On the other hand its market price would be much lower as its demand is very limited: a few cooks. Ergo, for 525 the supply is much higher than the demand, so the market is clogged with 85K cooking honey listed for 525K which will never sell.

It won't sell, because if you need cooking honey, you are much better off placing a worker on it, than buying it on the marketplace. So the market is limited to a handful of not too bright cooks. Those who produce it without being cooks are doing it wrong.

The result is anti-comparative advantage. Those who'd produce honey had comparative advantage in it (otherwise they wouldn't do it), while cooks probably don't (a specialized cook is better off spending his time leveling cooking than getting contribution points for workers). So they would be better off if the cook would buy the Honey for 150-200 market price than having to make it himself, while the producers would be better off selling Honey than just looking at an idle worker.

The minimum price of Honey can be considered a protective tariff placed by the "guild of cooks" in order to protect their own workers jobs. Thanks to the tariff, cooks should give a work to a worker in Alejandro farm as importing is too expensive. The loser of course is everyone else: the cook himself, the worker empire player and the worker of the latter who is now unemployed.

1 comment:

Provi Miner said...

tariff's are odd things at best. there are some real reasons for them in the RW. for example strategic items things you "must" have just in case that without a tariff you might not have access to for some time. Other tariffs are equally ok... A highly select item that has very limited applications. Also there are tariff's and then there are tariff's. An example of tariff that existed without existing is the so called Lettuce tariff in japan in the 60's onward. The idea was to protect the Japanese farmer without initiating a tax war so inspectors (after all you want to only allow good products in) would find reasons to delay imports till they rotted making an unofficial tariff.