Brainstorming on the trade system

[Jules Brunet]

Trading system rework



As a disclaimer, I admit that I do not know all the little mechanics of EU4, having player it only a few hours above a thousand. But, I do think that there is a consensus on one thing: trade favorize big empire. In the current way, the best way to make lots of trade is to control your home nod and everything that goes in it. But, it has some problem. The current system will disadvantage tall play and any attempts to play a merchan republic like Venice or Lubeck. Second, it pushes you to conquer everything around you to have a monopoly. Or, the best trade was to ‘’extort goods from foreign nation for a low price, and sell it to the neighbour for a higher price’’.



I do know that the trading nod system cannot be drastically change, but there is something that could be done about it to be less profitable for blobbing country, and more for tall country. Also, note that this is more of a draft: I do know that it should be adapted to fit more case in the game, and I am open to suggestion for it.



But here I go.



First, the home node dilemma. As I stated in my premise, the money made in the home node was basically link to the goods that you grabbed in the node, and that you sell then to your neighbour. For that reason, I think that your trading profit should be link to the number of development that you do not own. Something like: Trade profit= (total trade of the nod*% controlled) * (non-owned dev / owned dev) *other trade efficiency modifier. Sure, as said it is a draft and the formula should be adapted, but it would show the reality of trade: it was better to owned a huge part of the trade in an area with lot of possible customer, than to own the trade nod with no other customer or to own a huge part of trade in a poor area.



Second: upstream nod. This one may be more complex in a sense, but my idea would be link to the ‘’action’’ of each country in the nod. What I mean is, country that are transferring trade power from the nod would see the production of goods of their non-colonial, non- trading company (sure, trading company should return to the old 75% autonomy floor) reduce. Why that? I will give an example of it.



Let say that Ming steer trade from Canton to Beijing, all 100% controlled by Ming. The profit from this trade for the country will be quite small: after all it was Chinese buyer, that bought goods from Chinese workers, all in Chinese currencies. But the same merchant that will buy goods in Japan and sell it in Beijing should make more profit, since it would show that ascendant of the Ming economy over the Japanese and Korean economy.



As I said, it is a draft but it may be one way to fix the problem between Tall play and Wide play, without making wide play a wack-a-mole game with rebels or some micro-management hell.

 

[Martynios]

You make a major mistake: trade doesn’t consist of deals between states, but of the commerce conducted by private merchants. Trade income isn’t profit from buying low and selling high, it’s taxes on private trade.

 

[iquabakaner]

I'd love to see single ports matter more, instead of needing to take every single province in the node to dominate the trade. The trade systems should realistically favors grabbing important ports, rather than everything, considering how early European colonial empires, in particular Portugal and the Netherlands, thrived on ports instead of large colonies.

 

[Jules Brunet]

You make a major mistake: trade doesn’t consist of deals between states, but of the commerce conducted by private merchants. Trade income isn’t profit from buying low and selling high, it’s taxes on private trade.

It isn't a major mistake. Taxing trading goods is one way to make money, sure. But it is the side effect of the trade system. A country may put the taxes that it wants on goods, if they don't sell no ducat will come in its coffer. What makes country like Venice rich was that the merchant did make lots of profits, thus giving more taxes to the state. If merchant didn't make that much profit, the rich Venice that we know now would have never existed. And how do they do their profit? By buying low and selling high.

On the other hands, inside trade in the same city doesn't bring in any new money. It is the same money that, let say, Venice issued that is trade for goods between the merchant. What did bring new money was when the said merchant sold the goods to a neighbour country merchant, de facto sending more ducat inside of Venice, even if the huge part of it stay in the merchant coffer.

 

[Jules Brunet]

I'd love to see single ports matter more, instead of needing to take every single province in the node to dominate the trade. The trade systems should realistically favors grabbing important ports, rather than everything, considering how early European colonial empires, in particular Portugal and the Netherlands, thrived on ports instead of large colonies.

What I did propose should make it happens. It should send more ''ducat'' from a nod where you control a huge part of the trade but a small part of the production (which is probably the best gamey mechanics to show the strength of owning a good trading province in ''foreign'' lands.). It would also, by extension, make trading idea and maritime idea more attracting for this purpose.

 

[Martynios]

It isn't a major mistake. Taxing trading goods is one way to make money, sure. But it is the side effect of the trade system. A country may put the taxes that it wants on goods, if they don't sell no ducat will come in its coffer. What makes country like Venice rich was that the merchant did make lots of profits, thus giving more taxes to the state. If merchant didn't make that much profit, the rich Venice that we know now would have never existed. And how do they do their profit? By buying low and selling high.

But these merchants operate autonomously, and unless the state has a mercantilist policy, it doesn’t matter tax-wise if the trade is internal or international.

 

[Jules Brunet]

But these merchants operate autonomously, and unless the state has a mercantilist policy, it doesn’t matter tax-wise if the trade is internal or international.

As said above (I just thought of this point later), it does matter. When you trade inside of your own country, there is almost no wealth created. It is the same money that the country issued that is use to trade it for goods, and the total amount of money inside the country doesn't change. Sure, the state can grab a share via taxes, but it is still not that much.

But when you trade it in neighbour country, the private merchant will bring in new money for the state. Sure, he keeps a lot of it for himself. But the country will still grab ''new'' money with its taxes, which didn't happens in the internal trade. It may also, by increasing the demands for the traders currency's, increase the wealth of the nation with a higher currency value.

 

[Ironside121]

I'd love to see single ports matter more, instead of needing to take every single province in the node to dominate the trade. The trade systems should realistically favors grabbing important ports, rather than everything, considering how early European colonial empires, in particular Portugal and the Netherlands, thrived on ports instead of large colonies.

This is represented in the game by Centers of Trade.

The AI colonizers don't really manage this well, but in MP games the entire point of colonizing is to grab them first.

 

[Martynios]

As said above (I just thought of this point later), it does matter. When you trade inside of your own country, there is almost no wealth created. It is the same money that the country issued that is use to trade it for goods, and the total amount of money inside the country doesn't change. Sure, the state can grab a share via taxes, but it is still not that much.

But when you trade it in neighbour country, the private merchant will bring in new money for the state. Sure, he keeps a lot of it for himself. But the country will still grab ''new'' money with its taxes, which didn't happens in the internal trade. It may also, by increasing the demands for the traders currency's, increase the wealth of the nation with a higher currency value.

You make a convincing point.

 

[hahaha01357]

As said above (I just thought of this point later), it does matter. When you trade inside of your own country, there is almost no wealth created. It is the same money that the country issued that is use to trade it for goods, and the total amount of money inside the country doesn't change. Sure, the state can grab a share via taxes, but it is still not that much.

But when you trade it in neighbour country, the private merchant will bring in new money for the state. Sure, he keeps a lot of it for himself. But the country will still grab ''new'' money with its taxes, which didn't happens in the internal trade. It may also, by increasing the demands for the traders currency's, increase the wealth of the nation with a higher currency value.

Just because internal trade doesn't bring new products into the country doesn't mean no wealth is generated.

 

[maxirage]

There is tons of wealth created through intra-national trade. One of the reasons the USA is so economically prosperous, for example, is the free movement of goods and labor across almost an entire continent. Certain provinces are move suited to producing a certain good or resource, and thus trading between it and others will make everybody better off. You seem to be only looking at trade through a mercantilist/protectionist lens, where if you sell more goods to a different country you "win". In the end, it's just a financial transaction. Do you lose because a clothing store sells you a T-shirt? No, everybody wins, just like in trade.

 

[Canute VII]

I'd modify this

Trade profit= (total trade of the nod*% controlled) * (non-owned dev / owned dev) *other trade efficiency modifier

to

Trade profit= (total trade of the node*% controlled) * ([non-owned dev{positive relations} + owned dev] / [non-owned dev{negative relations} + owned dev]) *other trade efficiency modifier

That would mean, both owning the development and having positive relations with countries holding the development would be equivalent. On the other hand, if you piss other countries off (and don't controll most of the provinces), your traders will have a rough time trading there. It would (1) strengthen diplomacy and (2) put a break on the income snowball.

 

[Jules Brunet]

Just because internal trade doesn't bring new products into the country doesn't mean no wealth is generated.

I do not say that no wealth is generated, and there should be a floor fore owning 100% of your trade node. But it was less profitable than using your trade advantage to become the main ''seller'' of the region.

There is tons of wealth created through intra-national trade. One of the reasons the USA is so economically prosperous, for example, is the free movement of goods and labor across almost an entire continent. Certain provinces are move suited to producing a certain good or resource, and thus trading between it and others will make everybody better off. You seem to be only looking at trade through a mercantilist/protectionist lens, where if you sell more goods to a different country you "win". In the end, it's just a financial transaction. Do you lose because a clothing store sells you a T-shirt? No, everybody wins, just like in trade.

Well, the modern US aren't a good example. Their economy works only because people keep trusting in the US dollar, and because the US use their military and political strenght to maintain the value of it. And if I do see trade with mercantilism and protectionism lens its because... it is EU4. Liberalism economic wasn't a thing in this time frame (sure, there was some tries within the Revolutionary French...) and trade worked basically with a Mercantilsim system. So sure, you can get something good from within an Empire, but the resulting profit will be smaller than controlling the silk trade of Italy and selling into your neighbour silk clothing.

 

[Martynios]

I do not say that no wealth is generated, and there should be a floor fore owning 100% of your trade node. But it was less profitable than using your trade advantage to become the main ''seller'' of the region.



Well, the modern US aren't a good example. Their economy works only because people keep trusting in the US dollar, and because the US use their military and political strenght to maintain the value of it. And if I do see trade with mercantilism and protectionism lens its because... it is EU4. Liberalism economic wasn't a thing in this time frame (sure, there was some tries within the Revolutionary French...) and trade worked basically with a Mercantilsim system. So sure, you can get something good from within an Empire, but the resulting profit will be smaller than controlling the silk trade of Italy and selling into your neighbour silk clothing.

Mercantilism was invented in the 17th century, halfway through the time period, as a reaction to the free trade dominance of the Dutch Republic.

 

[Jules Brunet]

Mercantilism was invented in the 17th century, halfway through the time period, as a reaction to the free trade dominance of the Dutch Republic.

Mercantilsm started before the 17th century: there was evidence of those practice already by the 15th century in Venice and Genoa. And I am not that into the Dutch history, but it doesn't seems to be quite a ''free trade''. Sure, it wasn't as regulated than in Spain or other monarchy, but it was still a ''guild'' thing. And even for the Dutch the basic was the same: bring in cheap goods to sell them higher, which is easier when you got neighbour country.

 

[hahaha01357]

I think what it all comes down to is that scarcity and demand creates value, which really isn't simulated in this game. Just because an item comes from a foreign country does not mean it's valuable. The European attempts to get into the Chinese markets prior to the introduction of opium is a great example of this. What we need is a system where we can simulate the fact that in the 16th century, a pound of pepper in India is not the same price as a pound of pepper in England and that being able to control the supply of said pepper into England can make people extremely wealthy. I guess to be constructive, we could have certain modifiers in provinces or regions to simulate demand (which can be created or removed via event). Then a country that has trade presence in both the commodity producing and commodity demanding region can gain income based on the percentage of trade they control (thus simulating their role as middlemen). Not sure how to simulate the profits generated from being the middlemen between middlemen though. Perhaps the modifiers or whatnot can be tied to the trade nodes themselves? Like maybe the player opens up the trade map, clicks on the "Antwerpen" trade node and immediately sees what commodities it produces and demands. Then the player can go look for trade nodes that produce those commodities and try to control the trade nodes that produce them (and maybe those along the way as well). I have no idea how feasible this is to mod though.

 

[Jules Brunet]

I think what it all comes down to is that scarcity and demand creates value, which really isn't simulated in this game. Just because an item comes from a foreign country does not mean it's valuable. The European attempts to get into the Chinese markets prior to the introduction of opium is a great example of this. What we need is a system where we can simulate the fact that in the 16th century, a pound of pepper in India is not the same price as a pound of pepper in England and that being able to control the supply of said pepper into England can make people extremely wealthy. I guess to be constructive, we could have certain modifiers in provinces or regions to simulate demand (which can be created or removed via event). Then a country that has trade presence in both the commodity producing and commodity demanding region can gain income based on the percentage of trade they control (thus simulating their role as middlemen). Not sure how to simulate the profits generated from being the middlemen between middlemen though. Perhaps the modifiers or whatnot can be tied to the trade nodes themselves? Like maybe the player opens up the trade map, clicks on the "Antwerpen" trade node and immediately sees what commodities it produces and demands. Then the player can go look for trade nodes that produce those commodities and try to control the trade nodes that produce them (and maybe those along the way as well). I have no idea how feasible this is to mod though.

It is a good idea, but it comes with it's problem in the current system. First: how to decide the value. Sure, you can link Iron and Copper to war loss, and wood and clothes (?) to global ship lost, but for the rest? It should be something link to the dev of region without (x) goods, but it would also means that the Indian product or far east product will get a lower price since their dev is quite high... Or it could be some arbitrary change, but it isn't that great in my opinion. Second, I do think that their was a ''pricing market'' before and that it was erase in the later patch.

 

[iquabakaner]

This is represented in the game by Centers of Trade.

The AI colonizers don't really manage this well, but in MP games the entire point of colonizing is to grab them first.

Portugal didn't stop grabbing the African coast because other colonizers got all the rest.

 

[hahaha01357]

So I was thinking... Every province in the game produces a trade good right? What if the amount of these trade goods that each province produces is dependent on their production value? Then each trade node region will have certain demands based on development, institutions, buildings, etc. The goods produced by the provinces in each trade node will go on to satisfy their home node first before being put on the market as surpluses. Unsatisfied demand will then show up as deficits in the trade node.

For example (figures below are for illustrative purposes only):

Let's isolate the Nippon and Hangzhou trade nodes for this example.

The provinces in the Nippon trade node creates 80 grain and has a demand of 70 grain, making a surplus of 10 grain in the node. Meanwhile, the Hangzhou trade node has a deficit of 5 grain. Portugal has control of 60% of the trade power in Nippon, meaning it has access to 6 grains from Nippon to sell to Hangzhou.

Let's say grain has a base price of 2 ducats, modified by say 10% per every 5 surplus/defit = 1.6 ducats in Nippon and 2.1 ducats in Hangzhou. This means that Portugal can earn 0.5 ducats per grain sold in Hangzhou or 2.5 ducats to fulfil the deficit.

But Portugal is not the only one selling in Hangzhou. Japan is also selling the rest of their surplus to Hangzhou and they control 30% of the trade power in the node compared to Portugal's 20%. Since they're the only ones supplying this good, this means the demand is split between the two, meaning Portugal will earn 1 ducat and Japan will earn 1.5 ducat in this situation.

But what about the remaining 5 surplus in Nippon? Well, there's still a price difference between the price of grain in Nippon and Hangzhou and so they will continue to facilitate the exchange of grain from Nippon to Hangzhou until the price reaches an equilibrium. Or if the supply of grain from Nippon to Hangzhou cannot fill the deficit, then it will lower the supply in Nippon to below its demand, raising the price in this node and allowing other trade nodes to fulfill the supply.

I think a distance modifier between trade nodes should also be added to reflect the markup on risk and transportation for travelling long distances. And perhaps a modifier in the selling market for being the primary or sole supplier of a certain good?

 

[Jules Brunet]

So I was thinking... Every province in the game produces a trade good right? What if the amount of these trade goods that each province produces is dependent on their production value? Then each trade node region will have certain demands based on development, institutions, buildings, etc. The goods produced by the provinces in each trade node will go on to satisfy their home node first before being put on the market as surpluses. Unsatisfied demand will then show up as deficits in the trade node.

For example (figures below are for illustrative purposes only):

Let's isolate the Nippon and Hangzhou trade nodes for this example.

The provinces in the Nippon trade node creates 80 grain and has a demand of 70 grain, making a surplus of 10 grain in the node. Meanwhile, the Hangzhou trade node has a deficit of 5 grain. Portugal has control of 60% of the trade power in Nippon, meaning it has access to 6 grains from Nippon to sell to Hangzhou.

Let's say grain has a base price of 2 ducats, modified by say 10% per every 5 surplus/defit = 1.6 ducats in Nippon and 2.1 ducats in Hangzhou. This means that Portugal can earn 0.5 ducats per grain sold in Hangzhou or 2.5 ducats to fulfil the deficit.

But Portugal is not the only one selling in Hangzhou. Japan is also selling the rest of their surplus to Hangzhou and they control 30% of the trade power in the node compared to Portugal's 20%. Since they're the only ones supplying this good, this means the demand is split between the two, meaning Portugal will earn 1 ducat and Japan will earn 1.5 ducat in this situation.

But what about the remaining 5 surplus in Nippon? Well, there's still a price difference between the price of grain in Nippon and Hangzhou and so they will continue to facilitate the exchange of grain from Nippon to Hangzhou until the price reaches an equilibrium. Or if the supply of grain from Nippon to Hangzhou cannot fill the deficit, then it will lower the supply in Nippon to below its demand, raising the price in this node and allowing other trade nodes to fulfill the supply.

I think a distance modifier between trade nodes should also be added to reflect the markup on risk and transportation for travelling long distances. And perhaps a modifier in the selling market for being the primary or sole supplier of a certain good?

Not a bad idea. Establishing a ''demand'' (probably base by the Dev of the trade node for each goods) and basing the value of goods not for each province, but for each trade node, could be a great idea and, I think, not so hard to do.