Random thoughts about City Economic Simulation

[megapolis]

Hi David,

In my latest game I made the most progress than in every run before and it allowed me to make some observations.

First of all is what is the ultimate goal of this game? Of course it is strange to request a goal from a sandbox but this one definitely has some. One is obvious from the name of the game: to become filthy rich. CES DLC brings in comes from the Nation Score table. I know that everyone can think of other goals but these two are enough for now. All this leads to totally wrong incentives and I see a big problem in it. Even more, CES DLC brings in a lot of unnatural, gamey moments and wrong balance decisions.

1. City Competitiveness. It's a total disaster.
CC is gamey. I don't see any corellation between CC and reality. As I understand, it was invented as the instrument to control inflation.
CC sets wrong incentives. You should not develop the same industry in all the cities because if an industry is develop in all the cities, export will fall to zero in all of them. Really? We are exporting goods, not trading them between cities. Wrong incentive here is that you have to prevent a couple of industries from development in each city.
High CC creates high export volumes that creates inflation that eats all your money. As a result at one moment you have to stop research because you have to slow down inflation. Really? I don't see any incentives in real world to make your economy less competitive.

2. Effect of export on economy. I counted several times in my games: Inflation=(Export-YourProfit)/GDP. Economy does not grow at all, all the money from export are eaten by inflation. Looks like economy growth is equal to population growth. GDP per capita almost does not grow. It is an endless Dutch Disease. The problem is that Dutch Disease appears when one economy sector prevails over others, not when all the sectors are highly competitive. And... I am from Russia. Our current economy suffers from Dutch Disease. And export profits are not fully eaten by inflation.

3. Classic demand and salary model with salary capped at 2000 and demand driven by nesessity index. A foundation of Cap1 and Cap2. A foundation that made Cap2 the tool for studying economy and a great hardcore simulator. I am afraid that CES is the moment when simplicity of this model became a drawback of the game. Timespan of the game with CES is much bigger than timespan of the base game and for example salaries are maxed out and removed from equation that is solved by the players.

4. Documentation. As far as I understand, the last manual that we have is Cap2 manual. 17(!) years old. I understand that some of my conclusions can be incorrect because of lack of information. Sorry, but the game with CES moved to the next level. And the changes that you can make to the city will be visible in 10 game years or even more. So it's much more difficult to do some tests and make proper conclusions. I really think that this time we need not a basic manual that explains the interface but the extensive manual that explains all the connections of all the factors of city economy in CES. Yes, it will be an Macroeconomy 201 textbook but this time it is a necessity. Chess rules are open but it does not make it less interesting or less playable. I remember that I already asked this question a year ago but was ignored.

5. Other aspects. There are some other concerns but I hope that it is enough for today to start a discussion.

[megapolis]

5. Ecology. Another gamey aspect of CES. AI keeps most of its production concentrated in one city. It ruins its ecology. And you cannot improve it until you buy all your rivals and manually move factories to other cities.

[David]

The gameplay balance issue of the City Competitiveness Rating has been improved in the latest version v5.3.00.

Patch download link: viewtopic.php?f=10&t=4768

The city competitiveness rating now uses a new formula. Individual cities in the game will only have a slight impact on the global competitiveness rating, as the game will assume that there are other cities in the world that are not present in the game will be in the mix for calculating the global competitiveness rating. As such, let's say that all the 5 cities in your game have a city competitiveness rating of 80, it will only increase the global competitiveness rating from its original value of 30 by a dozen points or so.

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2. Effect of export on economy. I counted several times in my games: Inflation=(Export-YourProfit)/GDP. Economy does not grow at all, all the money from export are eaten by inflation. Looks like economy growth is equal to population growth. GDP per capita almost does not grow. It is an endless Dutch Disease. The problem is that Dutch Disease appears when one economy sector prevails over others, not when all the sectors are highly competitive. And... I am from Russia. Our current economy suffers from Dutch Disease. And export profits are not fully eaten by inflation.

I checked your save game and the inflation is around 5%, which seems reasonable. Even the lifetime inflation rate in your game doesn't seem to exceed 7% very often. In my opinion, the inflation at this rate is not destroying the wealth that you have built up.

Compared to the real world - US historical inflation: https://www.google.com.hk/search?q=hist ... dVSG4sXGNM

So the inflation rates in your game seems to be in the normal range.

Also, it is unemployment that affects inflation, not GDP growth.

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Regarding the documentation, you could find the documentations on http://www.capitalismlab.com/ces-dlc/.

You could also see the help text in-game for explaining the connections, like those '? buttons on the graph pages in the city report.

[megapolis]

Hi David,

I am a mathematician, not an economist. So I am trying to "solve" games by finding solutions to the equations that game offers. In case of competitiveness rating I see the following:
I need three universities to maintain 80+ rating in 18 out of 22 industries. Maintaining higher rating in less amount of industries will require more micromanagement because multiple cities environment gives me an incentive to never go above 100.
That means that in setup with more than 5 cities it will be better for me just to choose 4 industries in every city and never develop them.
Let's count drawbacks of my artificial micromanagement in an extreme 2 cities environment.
For 2 cities I will have to split 22 industries and maintain 11 of them in each city above 80. This way I will lose 7/18 or around 40% of my export income. On one hand I rely on export taxes to fill city budget on another hand I spend a lot of money on university research. I can close one university and save this money in my budget.
University costs are 30m/year. Export income is around 130m/year/industry (plus some fraction of 2% per year at 18% taxes). Cost per industry is 90/18=5m/industry/year. Profit is 130m*18%=23m/industry/year.
Looks like a dozen points is a good tradeoff for three universities in two cities.
Now let's count if it is a reasonable tradeoff for fourth university in 5+ cities.
City Expenses are 20 or 30m/year (depending on methods of accounting). Let's say hey are 20m/year.
Base profits from 4 new industries are 92m/year.
Loss of profits at 12 points are 1-(80-30-12)/(80-30)=24%. 130m*24%*22*18%=123m.
So I will get 92m/year and lose 143m/year. No. I will still have 3 universities and restrict my research.
To sum it up: for 2-5 cities it is a good solution, for 5+ cities it does not change anything.

Now talking about inflation. My point was not that 5-6% inflation that I had is a big number. It is totally relevant. But I see that in game people spend all their money and never save a dime. For example in 90s in Japan saving ratio was so high that a country with a positive trade balance had negative inflation and Central Bank Rate of 0.1-0.2%. And that is a problem.

[David]

You may patch you game to v5.1.26 which is compatible with your current save game and contains the improvement to the city competitiveness rating described in my previous post.

You may test it in game and see if the current algorithm serves you well.

If not, I can relay the info to the dev team and suggest them to tweak the formula by increasing the number of non in-game cities.

Current formula: (assuming that you are playing a game with 10 cities)
Global Competitiveness Rating = (Average CC of 10 in-game cities + Average CC 30 other non in-game cities) / (10+30 total number of cities).

Increasing the number 30 will make the 10 in-game cities' CC ratings less significant.