Runescape has been a part of my life for over ten years now. In all that time, there’s been one universal truth, one piece of knowledge that no player can truly go without: It’s all about the gainz.
Runescape has a player-run economy and the players do whatever they can to grow their wealth. Initially, this was done by having players trade items and coins directly, but that all changed with the introduction of the Grand Exchange.
What is the Grand Exchange?
Well, it’s remarkably similar to the real-world Stock Market except instead of shares in corporations, you trade in-game items with other players for money.
This is ideal for anyone who wants to buy or sell something quickly for a fair price without going through the effort of finding someone willing to trade.
Prices on the Grand Exchange are entirely player-driven and you can theoretically sell or buy any item at any price, provided there’s someone who will complete the trade. This massively streamlines the economy and makes everyone’s life easier.
Ok, I know what you’re going to ask now.
How does this translate into an education on economics?
Well, to properly answer that question, I’m unfortunately going to have to give a brief explanation of some basic economic terms and concepts, but I’ll spread this out so you don’t die of boredom.
The first concept I need to go over is one you’ve likely already heard of; supply and demand. Take a look at this graph here.
As you can see, and as you probably already know, supply and demand have an inverse relationship, and the point where they meet on the graph is the market value of the item in question.
Though there are many things that can influence this graph, we only really need to know the basics.
Greater supply = lower price,
Greater demand = higher price
Let’s now take a look at how supply and demand can affect an item in Runescape.
Below, you’ll see the Grand Exchange price history of a Dwarven Stout (m), which is a drink which temporarily boosts the player’s mining and smithing skills.
One part of this graph should really stand out.
You’ll notice that in 2014, this item had an absolutely massive price crash. It went from 70,000 gold to under 5,000 in the span of four months, and nowadays sells for under 100 gold.
Why did the price change so much?
It all has to do with supply and demand. Over the years, the demand for this item has been pretty constant. People used them when they needed a few extra mining or smithing levels to complete a task, and that never really changed.
However, what did change was the supply.
Prior to 2014, the only way to get this item without buying it from another player was to go to one of two brewing vats in remote locations. Then you need to combine a bunch of items, some of which aren’t particularly easy to acquire.
After that, you need to wait up to five real-world days for the process to finish.
At that point, you needed to hope that the batch didn’t go bad, and then you needed to pray to the RNG gods that this batch of Dwarven Stout matured instead of being a standard batch. Needless to say, not very many people did this, and as a result, the price remained quite high for a long time.
And then, as you’ve probably guessed, the supply shot up in 2014.
Well, the developers of Runescape (Jagex) released the elf city of Prifddinas.
In this city, the players can pickpocket the elf residents. This is not only profitable, but is the fastest way to level up the thieving skill in the game.
The residents in the Trahaearn section of the city can give, you guessed it, Dwarven Stout (m). As this method of thieving gained popularity, the economy was flooded with Dwarven Stout (m), resulting in one of the fastest and most dramatic price crashes in the game’s history.
This is a very clear and direct example of how supply and demand affect the price.
But supply and demand aren’t the only way Runescape has shown me how an economy works. It’s also shown me how price floors work, and to a lesser degree, how price ceilings work.
To explain, I first need to explain some Runescape game mechanics.
Runescape has two alchemy spells: Low Level Alchemy and High Level Alchemy.
These spells will turn almost any item into gold coins. Take a look at the following two screenshots of a healing item taken from the in-game price checker
On the left, we have the current Grand Exchange value, and on the right we have the High Level Alchemy value. As you can see, the Grand Exchange value is much higher than the Alchemy value.
This is because this item is a highly valued means of healing yourself and if you were to use the High Level Alchemy spell, you would lose money on the cost of the spell itself.
Now let’s look at another item, the Rune Sword
As you can see, the two values are much closer to one another than before. This is because quite frankly, the Rune Sword is a piece of junk. Nobody uses this weapon because it’s not very accurate and doesn’t do much damage at all.
Furthermore, the supply of these items is quite high as a lot of monsters can drop them. However, this item is made out of the in-game metal Runite, and all Runite items have quite a high Alchemy value.
Because the Rune Sword can at any time be converted into 12,480 coins, this value acts as a virtual price floor, which in the real world is when the government makes a law stating that a certain item cannot be sold for less than a certain value.
Therefore, even though the Rune Sword is absolutely useless and has a high supply, its value never falls much lower than 12,000 coins.
This effective price floor affects many items, primarily weapons and armor, and can harm the Runescape economy in many ways. For example, it can be hard for new and low-leveled players to obtain lower leveled gear because it’s so expensive.0
It also has led to the developers adding these items into the drop table of new bosses to ensure that they remain consistently profitable to kill, which just feeds into the problem.
And of course, because these items always eventually get turned into coins, the game has suffered notable inflation.
The game also sort of has a price ceiling, whose real-world counterpart is, as you can imagine, a maximum price for a certain thing.
However, this wasn’t due to poor decision-making as much as engine limitations. Due to the game originally being coded in Java, the highest amount of items that can be in a single inventory slot is 2,147,483,647.
This limit doesn’t really impact the game very much. Only a handful of items are even worth above that amount, with most of them being discontinued cosmetic items.
Furthermore, there is an item worth exactly 25 coins which is often used as a second currency.
Runescape is many things. A fun game, a time-waster, a procrastination aid. But believe it or not, with a little bit of thought, it can also be a freaking economics textbook.