# How would closing borders and supply routes affect market prices? [closed]

This was originally posted in Role Playing Games but they felt it was better posted here (this will be used for D&D 5e, some people thought it might be relevant.)

I'm developing a world where governments are freaking out over a perceived threat (not a virus). The stars have disappeared and the gods have seemingly abandoned them. Many leaders have ordered their borders locked down and trade routes closed for various reasons.

Different countries would have the products and resources they can produce themselves (obviously) but things from outside their borders would be increasingly scarce as time goes on. I know that not having shipments to a desert country would raise the price of the remaining wood products in their markets. But I don't know how much. I know what each country produces and what they import.

My question: What is a reasonable scale for increasing scarcity?

I'm mostly looking for a realistic percentage I can add to market prices every week/month to reflect the scarcity. But if a set scale is more realistic let me know.

P.S. I know my PCs will be able to exploit this with smuggling and get "hella rich" as they would put it. But in the long run if they waste their time smuggling they will come to the inevitable end of the campaign with too much money and not enough power. I'm letting them know it's on a timeline so they can make their own decisions.

• Thanks for thinking of us. Unfortunately it looks like your world is already build and you're asking how actions in your world will play out. Jul 20, 2021 at 23:24
• @sphennings I think he's saying he's developing a new world for an existing group of players and is fleshing out the last details of the economics. Jul 21, 2021 at 0:34
• I think right now the question lacks details. A reasonable scale will depend on goods' production, transportation, specific use, etc. Please add details about the economies in question. In addition, I would suggest looking into historical examples of price changes due to problems with the availability of resources. Jul 21, 2021 at 0:38
• You appear to be looking for a single multiplier - which is so simplistic that you might as well roll dice and pick one. In reality, the variables that affect prices are very complex because as various items become scarce, the behaviors and businesses (from parties to construction) that depend on them ebb and flow, which affects other resources, which affect other behaviors and business, which can then affect the first... economics can be really complex. But... it might be enough for you to simply apply the ... (*continued*) Jul 21, 2021 at 2:55
• ... law of supply and demand. Have you researched that? If so, why does it not solve your problem (that's important for us to know to hep). If not, would it make more sense to delete this question until you've taken the time to study it a bit? It's the basis of your question, and without it almost anything we suggest would be either as meaningless as that roll of the dice or a challenge to interpret without that study. Jul 21, 2021 at 2:56

As the other two answers put it, I dont think there is any way you can make a logical increasing percentage per timeframe, due to scarcity being illogical to normal life. (specifically for westernized, more developed countries in our world)

What I would suggest is look at real life examples of what happens when the brown stuff hits a fan. examples - The current (July 2021) water scarcity in Iran, the current problems being faced in Cuba, as mentioned by @o.m. the great toilet paper crisis of 2020, and any number of other times that humans have been even mildly inconvenienced by famine, plague and war. It is in human nature that we all want what is best for ourselves, and who among us can honestly say that when it is a matter of life and death, we would not screw over the next guy if it gives even the hope of something better for yourself and family?

The examples I am most familiar with, as they occurred in my country, are the great cigarette shortage, the alcohol shortage, and the current KZN crisis.

The first two occurred when covid first hit, and the gov ordered lockdowns for two weeks. To go with this, was a complete ban on the sale of alcohol and cigarettes. As there was no legal way to get these things, people had to go to illegal traders, who could charge what they wanted. for comparison, a packet of 20 cigs costs about R35 on average, about \$2.40, and a bottle of beer is around R20, \$1.37. once the ban came into effect, traders were selling cigarettes for anywhere between R100-R200, \$6.87 - \$13.75, and a bottle of beer for about R75, \$5. After two weeks, when the lockdown and the ban was extended by a further month, the prices increased overnight, with some traders selling up to R650, \$44,68 for cigarettes and about R200 for beer, about \$13. I use only beer as the example because it would be to long if I went into the price of spirits, wines etc. With the current KZN crisis, some stuff happened in the country that I am not going to get into, but basically rioters stole and burned a couple of trucks on the main highway between the port in the province of KZN and the economic heart of the country in Gauteng, effectively blocking it. They and other looters then began attacking shops and shopping centers, with a fair amount of the usual looting Tvs, fridges etc, but also burning down entire shopping centers, wholesale markets etc. Within literally 2 days, the price of food had increased about 1000%, and that was just for basics like bread. About R15, \$1 for a loaf beforehand, was now selling for close to R100, \$7 in 2 days. There are many other examples as stated above from around the world, So again, I would say look into some of those, and see how it would play out in your world. What is produced and available locally, what would people be willing to pay for something before they say nah, what would smugglers be willing to risk for the rewards. There is a whole plethora of things that can have an effect on what becomes sought after. Who would have thought it would be toilet paper? • Beware that this site enables inline LaTeX, so that the character $ is special. I have edited the answer for you; look at the changes. Jul 21, 2021 at 18:13
• Thanks @AlexP, I saw after posting that it looked all weird, didnt have time to try changing though, was leaving work. Jul 21, 2021 at 20:04
• Thank you for these specific examples, I can see that there's no solid answer to my question but this helped. Jul 22, 2021 at 0:08

In a situation like this, prices depend on market 'logic' and psychology. I don't know where you live, but much of the West had a toilet paper shortage at the start of the Corona pandemic that was almost completely irrational. Many people wanted to stockpile, toilet paper got scarce, even more people wanted to stockpile ...

• If only half as much chocolate arrives on the market as before, prices go up, people grumble, and buy less chocolate until the reduced demand matches the reduced supply.
• If only half as much potatoes, rice, and other cereals are available, people will also grumble, but they won't voluntarily buy much less until they literally run out of money. People have to eat, after all.
Market logic means prices would go up until roughly half the population 'decides' that they'd rather starve than pay those prices. You'd probably get government interference in the market long before that.
• This does not work as described for many categories of goods. Instead of buying less, people switch to cheaper alternatives. This is especially true for addictive substances (alcohol, tobacco, sugary foods) and 'comfort' goods. Jul 21, 2021 at 21:50
• @Otkin, my second bullet point enumerated the starchy food groups. How would people substitute for all of them?
– o.m.
Jul 22, 2021 at 4:26
• Do you mean that some goods have no substitutes and their sales will follow your predictions? If it is the case, I agree with you. Your answer does not mention substitutes at all and that is why I wrote my comment. Jul 22, 2021 at 18:39
• @Otkin, if potatoes and cereals are cut in half, most societies will find no substitute to maintain their caloric intake. During the French revolution the queen was said to have said "if they have no bread, why don't they eat cake?" During the early days of the Corona lockdown disruptions I faced things like that on the supermarket shelves -- plain rolled oats were out, but I had the choice of muesli mixes, corn flakes, sugared corn flakes, wheat flakes, and so on. For much of the world history, and for some of the world today, things are different.
– o.m.
Jul 23, 2021 at 3:58
• @Otkin, continued, for instance some North Korea watches use the corn price as a shorthand for the food situation -- Koreans would prefer rice, so if corn goes up in the semi-formal markets things are bad.
– o.m.
Jul 23, 2021 at 3:59

There is no realistic percentage to add to prices each week. A percentage each week assumes rational behavior by people. In scarcity, people are not rational. Instead, each week, prices are simply what people will pay. That could jump 100% (or more) per week. In a "panic", any price is "reasonable".

For example, you mention a desert economy. Those economies are highly dependent on food from outside the desert area (unless people are living like the Apaches did - spread out, small bands, and living on plants that most of us wouldn't eat). If the borders are shut, wood is the least of the problems. Food becomes scarce and people either have to leave or die. The prehistory of the Southwest is full of places where people lived for a while and then abandoned because of lack of food. (Chaco Canyon due to the long drought, numerous other places scattered elsewhere lived in for 100 years or less.) Smugglers would last only a short time till they have all the money, but no food and they would immigrate to another place.

So, look at each region and what foods they produce. Prices go up not in a percentage, but in the "marginal percentage". Think more in terms of a "short squeeze" on Wall Street where the last day and the "shorts" need to cover themselves, prices can jump quite a bit.