Eve + Economics

So, as a big fan of economics and market analysis and all of that stuff, I have begun playing a little game called Eve Online.

It's a space sandbox where effectively everything used within the game is managed and controlled by the players. As such, it has a vibrant and busy marketplace where many goods trade very quickly and where market efficiency can be quickly analyzed and reviewed for investment opportunities.

I've been scouting out the landscape for almost a month now, gathering information, materials, and creating plans. Additionally, I've put together a small sum of capital from which I intend to start my empire.

I've scraped together starting capital of ~120M ISK (the currency), about 20M of which is wrapped up in various equipment with the other 100M being hard cash.

From this 100M, I'm going to begin tracking the ever-moving value of the commodities that I purchase and sell using this opportunity and evaluating myself against the market.

I'll be approaching this from two main components:

1) Item Creation

I've identified some goods that I believe are significantly over-priced relative to the inputs. For these goods, I am investing a sum of ~60M ISK in creating a production pipeline that I expect to earn a return of nearly 10% per week. This market is large enough that my initial splash should not impact prices; however, I do anticipate that my return will decline significantly once I am more established and making up a more significant portion of the market.

2) Item Destruction

I've identified some goods that I believe are significantly under-priced relative to their inputs. Eve has a reprocessing mechanic that allows a player to break an item down into its components at a loss of between 45% and 60% of the items inputs. I did not anticipate to find items that were selling below 50% of their raw production cost (based on market prices). As this business will rely largely on volume, it will be phase two of my approach once I've got a strong level of initial capital.

I'll provide weekly updates on my cash flow and any adjustments to future cashflow expectations to help evaluate how the business is going.

Hopefully you'll find this as interesting as I do!.