A Cursory Analysis Of Trade

Fiction by Sylvester Wrzesinski

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A Cursory Analysis Of Trade

Postby Xveers on Tue 23 Aug 2016 21:37

Heya!

So, as some of you may know, I work for a large freight brokerage. As such, I've slowly become familiar with the nuts and bolts of international trade. So perhaps it was a bit inevitable for me to see how that freight would look in my universe. :lol:

I kinda regretted that thought after a while, but it was still quite interesting, and I thought I'd post my results before I put them aside to chew on other issues. Please note that the document is a rough WiP and thus it's not as "clean" as some of my other work. Also, my comments below won't make much sense unless you're looking at it. So, onwards!

There's a few quick assumptions that you have to recognise that are going into this:

    1) Government income = GDP. This should send all the economists screaming, as it's nowhere correct, but it's the best and most consistent number I have. Since we are dealing with fantasy however, we can get away with some more questionable assumptions.
    2) We're going to use a gravity trade model (since it seems to be the best/easiest model to implement).
    3) All locations trade with all other locations in-empire, even if it doesn't make sense at first glance (this is somewhat consistent in real life).
    4) Our volume metrics are as follows: 1 HS of cargo space is 20*20*20m, or 8000m^3. 1 HS of space can carry 500 MC of trade goods (this is abstracted. Containers of wPod music players balance out against masses of raw iron ore. We assume it balances out). 1 TEU (twenty-foot equivalent, the short standard shipping container) is 45m^3, and a 40' can is 90m^3.
    5) We're not looking at inter-empire trade (so whatever the Ibizans and Tierl Enneth trade with deWulf is right out and ignored).
    6) Our primary constraint is distance/time for shipping. Loading and unloading costs/time are considered negligible (this is also fairly realistic. Even a post-panamax container ship won't spend more than two or three days in port TOTAL before putting to sea.)
So, spreadsheets ho! Gravity Trade Model for the deWulf

The data in it is from my deWulf empire as of turn 120. The first tab is a quick copy/paste of economic output by location, system, and then a mention what the largest population in-system is. There's no calculation here, just a straight copy-paste of the raw income numbers.

The second tab is where we get some more data and some analysis. At the top we have some rough data of the deWulf base CFN pool, with the statement that the total amount in said pool is double that. We're not looking at Qv or LQv here (though some argument can be made for Qv, as it could also represent powered containers like reefer units or more esoteric cans that require live in-transit support). Just ot the right is a quick representation of the trade flow model in one direction, with a weird constant (0.038). We'll see where THAT came from later.

Below that on the left, we have a grid representing how many jumps it is from system to system. Very pretty! This is what helps judge how much various places trade with each other. For example, even though there is a massive population difference between Falke and Fenris, they're only one jump apart, so that could make for a LOT of trade.

Which is what we see on the table just to the right! This is our distances cross-referenced with the various system economies fed into the gravity trade equation. And what do you know. The trade from Falke to Fenris is massive, almost 220k MC! And only one jump apart! The only thing that dwarfs this is trade between Fenris and Sintilla (unsurprising since they're also the only two V.Large population anchored systems in the empire).

However, these numbers are a bit hard to quite chew through. So lets simplify them a bit! The bottom-right table is the same as the one in the upper right, just with all of the cargo volume instead expressed in H-equivalents instead. Here the numbers are a lot smaller and easier to work with. Just to the right of that are the totals for each system's in and outbound trade. Sintilla is the biggest single trade port, followed by Fenris. A surprise is the Weyland colony (Itself only a Large colony), but located right almost in the middle of the least-distance route between Fenris and Sintilla. This place probably has a LOT of transshipment going on, and I imagine the locals make a killing on the transshipment of freight (not unlike the real ports like Dubai or Singapore).

Just off to the right of that we have those H units broken down into more "realistic" units, namely cubic meters, 40' container sizes, and then the industry standard TEU. Remember where I mentioned that constant? Take a look at the totals of all the 20^3 entries. That's total H in transit. It's 12,257.5 H. And the total supposedly available in the shipping pool? 12,290. Pretty close!

But how does this stack up with modern ports? Look a bit farther right and we can see a few major ports: New York / New Jersey, Los Angeles, Shanghai, and then Rotterdam. As you can see, the capital world Fenris is a little more productive than NY/NJ, but even the industrial powerhouse that is Sintilla is dwarfed by the sheer throughput that Shanghai saw in 2014!

So, thoughts/criticisms/insights?
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Re: A Cursory Analysis Of Trade

Postby Cralis on Wed 24 Aug 2016 01:52

This is entirely based upon actual MCr income earned in the game, correct? The "income" the government earns is only a portion of the larger economic output, more specifically the portion of the economic output that corresponds to the taxes, tariffs, and other governmental "monies" re-spent for government purposes.

I believe that ULTRA STARFIRE (which SSF is based on) assumes a 20-25% tax rate.

Likewise, the CFN availability pool does not account for the entire civilian shipping infrastructure (it's how we get away with "in-system CFN").

It's late. I didn't sit down and work it out. So I'm just asking :)
Last edited by Cralis on Wed 24 Aug 2016 08:19, edited 1 time in total.
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Re: A Cursory Analysis Of Trade

Postby Moonsword on Wed 24 Aug 2016 06:02

Interesting. I'm not awake enough right now to really chew on this, nor do I have the time, but I like the analysis.
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Re: A Cursory Analysis Of Trade

Postby Xveers on Wed 24 Aug 2016 22:42

Cralis wrote:This is entirely based upon actual MCr income earned in the game, correct? The "income" the government earns is only a portion of the larger economic output, more specifically the portion of the economic output that corresponds to the taxes, tariffs, and other governmental "monies" re-spent for government purposes.

I believe that ULTRA STARFIRE (which SSF is based on) assumes a 20-25% tax rate.


Never saw that kind of assumption in the rules, but you have to peg it somewhere, yes?

Even so, it's as close to a fair assessment as you can offer, as that tax rate would be drastically different depending on the government in question. The deWulf are a Corporate government, so they'd probably have a MUCH lower tax rate, probably coupled with a lot of flat user fees and per/unit charges rather than a tax rate proper. Conversely, more socialist governments might have even higher tax rates, possibly to the point of True Socialism™ and not even needing them at all. It would end up like those CIA economic studies of the Soviet Union; estimations built on unsound foundations to an economic reality that only exists on paper. So basing it on your tax income is the one solid anchor you have.

Likewise, the CFN availability pool does not account for the entire civilian shipping infrastructure (it's how we get away with "in-system CFN").


This is actually rather easy to quantify! I was working on an older assumption that the CFN was 1/3 of the total shipping in-service, but actually according to table L4.02, it's actually 1/10. So I need to modify my math a bit (essentially re-tweaking that constant that I mentioned). This actually makes me feel a bit better. As expensive as space travel is, in the Starfire universe it's cheap enough canonically that a major world should have more freight throughput than Shanghai.

One thing that I think I would adjust is respective cargo outputs based on the size of the largest colony in the system. It seems a bit odd that smaller systems like Stettin have so much cargo passing through them with such a small GDP.
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Re: A Cursory Analysis Of Trade

Postby Cralis on Wed 24 Aug 2016 23:54

Xveers wrote:Never saw that kind of assumption in the rules, but you have to peg it somewhere, yes?


That's because they are rules and don't include all the underlying assumptions. My god man, do you know how big the book would be? It's already 350+ pages! :lol:

Even so, it's as close to a fair assessment as you can offer, as that tax rate would be drastically different depending on the government in question. The deWulf are a Corporate government, so they'd probably have a MUCH lower tax rate, probably coupled with a lot of flat user fees and per/unit charges rather than a tax rate proper. Conversely, more socialist governments might have even higher tax rates, possibly to the point of True Socialism™ and not even needing them at all. It would end up like those CIA economic studies of the Soviet Union; estimations built on unsound foundations to an economic reality that only exists on paper. So basing it on your tax income is the one solid anchor you have.


True. But my point was the "GPV = GDP" is false not because I have a degree in economics, but because GPV only represents a fraction of the overall economy (the part that corresponds with all the stuff the government does).

The other part is... it looks like you count 1 MCr as equivalent to 1 million USD? That's actually not true either. However, we left that completely undefined so that we didn't have to identify why different empires, which would have vastly different measures of currency, are or are not equal in currency value.

This is actually rather easy to quantify! I was working on an older assumption that the CFN was 1/3 of the total shipping in-service, but actually according to table L4.02, it's actually 1/10. So I need to modify my math a bit (essentially re-tweaking that constant that I mentioned). This actually makes me feel a bit better. As expensive as space travel is, in the Starfire universe it's cheap enough canonically that a major world should have more freight throughput than Shanghai.


Well, if you expanded the "GDP" to be 4-5x larger, you'll probably arrive there faster :) \

One thing that I think I would adjust is respective cargo outputs based on the size of the largest colony in the system. It seems a bit odd that smaller systems like Stettin have so much cargo passing through them with such a small GDP.


By "passing through" do you mean "it sits between two larger populations and most of that trade belongs to them" ? If so, that would be fairly realistic. In the same way that most of the trade ships that ply through the center of the Pacific aren't doing business with Hawaii just because it's halfway between the continents...
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Re: A Cursory Analysis Of Trade

Postby Xveers on Thu 25 Aug 2016 01:03

Cralis wrote:True. But my point was the "GPV = GDP" is false not because I have a degree in economics, but because GPV only represents a fraction of the overall economy (the part that corresponds with all the stuff the government does).

The other part is... it looks like you count 1 MCr as equivalent to 1 million USD? That's actually not true either. However, we left that completely undefined so that we didn't have to identify why different empires, which would have vastly different measures of currency, are or are not equal in currency value.


Nope! I make no estimations as to the value of MCr to any real-world currency. I only equate it at 500 MCr = 1 H of cargo. Beyond that, no equivalences. The buying power of an EL 8 society should rationally be different from one that's barely getting to HT-2 (I remember that much from the High Trader book :P )

Well, if you expanded the "GDP" to be 4-5x larger, you'll probably arrive there faster :)


Yes, that would definitely get me a good bit of the ways closer!

One thing that I think I would adjust is respective cargo outputs based on the size of the largest colony in the system. It seems a bit odd that smaller systems like Stettin have so much cargo passing through them with such a small GDP.


By "passing through" do you mean "it sits between two larger populations and most of that trade belongs to them" ? If so, that would be fairly realistic. In the same way that most of the trade ships that ply through the center of the Pacific aren't doing business with Hawaii just because it's halfway between the continents...


Rather, I mean freight that originates and departs from Stettin. It's on the edge of colonised space and not a pass-through location like other star systems. The spreadsheet doesn't compute the carrying trade of freight that passes through a port en route elsewhere. For that I'd need to start overlaying a nodal map to go with the distances and then see how much is going down every connection.

One other thing I do wonder is the presence of sub-strategic speed 4 freighters. Not all freight -needs- that speed, and a CL-size FT that's built to only go 2 as opposed to 4 is going to have a substantially better profit margin, provided the goods can wait that much longer (and long-tail stuff like raw materials can certainly wait.) This is doubly true since in RL (and I can't imagine Starfire would be different) that the vast majority of the cost of shipping is the cost of the ship itself.

Edit:

So I've readjusted the constant to make up for the proper analysis of L4.02, which gives a total theoretical carrying capacity of 61,450 H. The adjusted constant is now 0.14, which gives us about 73% capacity utilisation, so I'll be making a query or two with my co-workers on about how laden the average container ship is nowadays (in rough ballpark). While every ship owner wants to be full of cargo, there is some deadheading of course. Cans aren't always where they need to be, and unfortunately they need to get moved from one place to another.

With these new more "plausible" numbers, it's even more apparent that dead end stations like Stettin need to get a cargo adjustment to reduce their actual trade value. While it has an in-system population of 10 million sophonts, It's a little hard to believe they have about 44,008 TEU of traffic per month (which is a bit much for that small amount of population).
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Re: A Cursory Analysis Of Trade

Postby Whitecold on Fri 26 Aug 2016 11:10

Just my two cents to the discussion, personally I wouldn't see GPV directly as tax income, but rather the more nebulous capability of an empire government to mobilize resources. For one nothing needs to be spent at all on maintaining planetary infrastructure, education, social welfare, economic subsidies and whatnot.
On the other hand,
A communist government might officially own the entire economy, but they still can't reroute everything to warship production, a corporate empire might not pay anything for colonizing planets themselves, but the investment still diverts lots of resources spent by companies, a council of clans might not own a single warship, but can draw upon the fleets of the clans in case of war (though keeping the ships all pointed in the same direction won't be an enviable task)

So I would see GPV as a measure of the surplus economic capability an empire has as a whole. For the total economy, I'd rather go with something like PTU rather than PU, though the final step of 500 might be too much of 'you really shouldn't colonize anymore' rather than a realistic factor for an economic calculation.
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Re: A Cursory Analysis Of Trade

Postby Cralis on Fri 26 Aug 2016 14:35

Xveers wrote:With these new more "plausible" numbers, it's even more apparent that dead end stations like Stettin need to get a cargo adjustment to reduce their actual trade value. While it has an in-system population of 10 million sophonts, It's a little hard to believe they have about 44,008 TEU of traffic per month (which is a bit much for that small amount of population).


Keep in mind that the GPV of smaller populations has been boosted in order to make them worth colonizing. Marvin and other contributors as far back as GSF really tweaked the numbers to get the ROR they felt was appropriate. In reality those small, frontier populations would probably have very little economic value and most shipping will be infrastructure support, nit actual trade.

Whitecold wrote:Just my two cents to the discussion, personally I wouldn't see GPV directly as tax income, but rather the more nebulous capability of an empire government to mobilize resources. For one nothing needs to be spent at all on maintaining planetary infrastructure, education, social welfare, economic subsidies and whatnot.
On the other hand, A communist government might officially own the entire economy, but they still can't reroute everything to warship production, a corporate empire might not pay anything for colonizing planets themselves, but the investment still diverts lots of resources spent by companies, a council of clans might not own a single warship, but can draw upon the fleets of the clans in case of war (though keeping the ships all pointed in the same direction won't be an enviable task)


While true, adding this kind of detail will make the game harder to play. We are considering some tweaks to reflect the economic differences of different governments (as they seem pretty homogenous now), but nothing to this degree.

So I would see GPV as a measure of the surplus economic capability an empire has as a whole. For the total economy, I'd rather go with something like PTU rather than PU, though the final step of 500 might be too much of 'you really shouldn't colonize anymore' rather than a realistic factor for an economic calculation.


It certainly isn't "excess capacity" as the government funds quite a bit of industry that caters only to the government. In some governments, some industry is owned by the government.

But the whole point was that GPV is not the entirety of the economy.
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Re: A Cursory Analysis Of Trade

Postby Xveers on Fri 26 Aug 2016 20:22

Xveers wrote:1) Government income = GDP. This should send all the economists screaming, as it's nowhere correct, but it's the best and most consistent number I have. Since we are dealing with fantasy however, we can get away with some more questionable assumptions.


:twisted: :twisted:

Cralis, so that never sent you running away and screaming? I'm losing my touch XD

Keep in mind that the GPV of smaller populations has been boosted in order to make them worth colonizing. Marvin and other contributors as far back as GSF really tweaked the numbers to get the ROR they felt was appropriate. In reality those small, frontier populations would probably have very little economic value and most shipping will be infrastructure support, nit actual trade.


Ah, definitely. I think I'm gonna do a little more playing around with the numbers. I agree with his decision (otherwise colonies would be few, far between, and massive early to mid-game income sinks), I'm just pondering how I can possibly negatively impact a planet's economic "gravity" based on its population. Any suggestions where to put a modifier and what logic to base it on, Cralis? Kinda thinking anything under Medium or Large should have a negative impact.

To be honest as well, I'm rather liking my numbers that I had with the first version. I might go and bump up the approximate carrying capacity to mebbie 50% of what it should be, but I'm not sure. It's definitely a case of "looking at the numbers for what feels right" than any kind of rational or logical decision.
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Re: A Cursory Analysis Of Trade

Postby Whitecold on Sat 27 Aug 2016 01:50

I don't mean surplus capacity as in naturally having grown too large, or superfluous, or not state owned, but rather the surplus capacity an empire doesn't directly need to sustain itself, and thus is available for defense and expansion

As far as trade vs PU go, if you want to give more value to large pops, I'd suggest you start with a very simple model like, 2xPU for small pops, 3xPU for medium and so forth.
However I think an argument can be made for tiny colonies having proportionally more trade than large colonies, as they are not self sustaining.
A mining colony on an inhospitable body will have to import almost all necessities, and will export their entire output, while a larger colony will use resources locally, and satisfy most of their consumption with local production.
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