What sense does it make to be paid by traveled distance?

[gardas714]

Hi,

First of all, I am in awe ( ). OpenTTD is just wonderful, and the collaboration capabilities are outstanding.

Now, for the topic at hand: What sense does it make to be paid by traveled distance? Why is a power plant willing to pay more for coal that originates far away? Has anyone thought of changing the profit function to something else? I can think of 2 interesting dynamics:

1. Some industries should be willing to pay more if they also sell more. For example, a factory should pay more for steel if someone also transports its goods to cities. This motivates players to create whole ecosystems, rather than just providing one input/output.

2. If a competitor decides to supply coal to the same power plant as me, I should get less profits (the factory can pay less because it should be able to bargain harder). This gives first mover advantages, and also creates interesting competition dynamics (probably tending to monopoly in the end).

I realize this may be hard to make compatible with AI, etc, but any thoughts on this would be appreciated!

Thanks,
Pedro

[Sylf]

You're far from being the first one to ask this question. I have yet to see an alternative solution that's good.

Take a look at this game script. It feels weird at first, but it offers one solution to the problem you identified.

[planetmaker]

It's very usual the transport companies charge more for larger distances. The powerplant does not pay you for the coal. You are paid only for the *delivery* - not the goods themselves - or did you pay anything when loading the coal onto your train?

However your things can be done somewhat by game scripts in the way like Sylf wrote.

[kamnet]

Also, playing with a different NewGRF Industry set can completely change the payments and economy.

[Sylf]

It's very usual the transport companies charge more for larger distances. The powerplant does not pay you for the coal. You are paid only for the *delivery* - not the goods themselves - or did you pay anything when loading the coal onto your train?

Aha, I often forget that part - we're getting paid for the service not for the goods.

With the default setting of OpenTTD, the players decide the source and destination of any cargo, and that too has baffled many players. Cargo distribution feature added couple of years ago is there as one answer to such a problem. I think there's a cargo dist setting where the cargo prefers closer destination? I don't play with cargo dist, so I'll let others elaborate on that.

[Auge]

Hello

Now, for the topic at hand: What sense does it make to be paid by traveled distance? Why is a power plant willing to pay more for coal that originates far away?

Only a single question: Did you ever travel by train or airplane and paid that travel yourself?

Tschö, Auge

[gardas714]

Thanks for all the comments. This is a very interesting subject.

The only way to make sense of the issue, however, is to consider both supply and demand. As a supplier, I am going to charge more if my (transportation) costs are high. Agreed. But this doesn't mean that I make higher profits, only higher revenues. Having said this, I'm actually ok with this part. The demand side, however, is missing. If a competitor now transports coal from much closer, the power plant should have a preference towards him because he can charge much less. This competitor should be able to undercut me and essentially ruin my business. There is no way a power plant in the US prefers coal from Australia vs. from its own mines!!

There seems to be a great opportunity to make prices depend on the actions of players. For example, if I start shipping a factory's goods, it should be willing to pay me more for its inputs, because I found a way for it to sell its output. It also makes the multiplayer game more interesting: If you start providing steel to a factory, I know it can ramp up production and so I have an incentive to ship its output to cities. You can get the ecosystem growing as it gets more connected, etc.

I'll look into the existing scripts. Thanks!
Pedro

[andythenorth]

There is no way a power plant in the US prefers coal from Australia vs. from its own mines!!

Ho ho Often in these threads, some of you lovely people bring up this "coals to Newcastle" problem, as unrealistic. And yet the UK coal industry (just about the most significant industry in the UK when the UK was an industrial economy) was destroyed by a combination of politics and cheap coal imports from overseas. So eh, realisms?

/me types this on his computer assembled in China from parts made all over the world.

* I agree that the behaviour in game can seem counter-intuitive, but eh, it is what it is. At least until someone can prove something better with code, not words...

[leifbk]

Personally I'm more perplexed by the fact that the speed of delivery of non-perishable goods such as coal matters as much as it does, paying insane amounts of money for coal delivered by high-speed trains across the world. We had a longish discussion about the OTTD economic model last year, which may interest you. Of course it reached no conclusion, but several interesting ideas were discussed.

[gardas714]

andythenorth: Obviously, I'm keeping other factors constant. If you want to incorporate factors such as different labor costs by region to justify making longer transportation more profitable (ie, importing from China vs. sourcing locally), go right ahead. That adds yet another dimension to the problem...

leifbk: Thank you! I will read it with interest.

Thanks for all the interesting posts,
P

[gardas714]

andythenorth: I hadn't read your whole post. Yeah... coding...

[MisterX]

Now, for the topic at hand: What sense does it make to be paid by traveled distance? Why is a power plant willing to pay more for coal that originates far away? Has anyone thought of changing the profit function to something else?

If we play as the power plant company, or something like that, your right. But we play as the transport company. If you have 2 boxes, one has to go from A to B and the other has to go from A to B to C. Obvious, the bill for the second box will be higher. That's why the power plant has to pay more for coal from distance. Just like normal.

The better question would be: Why would the power plant prefer coal from distance if there is also some short coal?

[ISA]

The better question would be: Why would the power plant prefer coal from distance if there is also some short coal?

I am not very smart in that subject, but first thing that comes in mind is the coal quality... If the further mine coal is better and You get more out of it and is more profitable, why not! But that's out of game play tough!

[Sylf]

This starts to veer off topic, but I'll echo what I've heard.
Here in America, where the domestic pollution standards are getting more strict, the dirty coal is exported to countries without such restrictions. I believe, where the restriction is low, they import those cheap coal to burn themselves, and export the cleaner coal to countries who are willing to pay the premium to meet their own clean air requirement.

It makes no sense environmentally, but it makes great business sense (at least short term) for all players involved. The third party - the transport company - that'd be us in this game - profit more from the increased demand for these transportation. Hooray for us, right?

[Baldy's Boss]

This starts to veer off topic, but I'll echo what I've heard.
Here in America, where the domestic pollution standards are getting more strict, the dirty coal is exported to countries without such restrictions. I believe, where the restriction is low, they import those cheap coal to burn themselves, and export the cleaner coal to countries who are willing to pay the premium to meet their own clean air requirement.

It makes no sense environmentally, but it makes great business sense (at least short term) for all players involved. The third party - the transport company - that'd be us in this game - profit more from the increased demand for these transportation. Hooray for us, right?

But anthracite (the cleanest burning coal) is a struggling niche industry rather than the coveted market leader.