In my current game I am playing on the British Isles map as Wales.
My oil production capacity is about 750 000.
If I set my markup to 22%, the domestic selling price is equal to the WM price and oil demand is still only about 400 000.
From a profit perspective (ignoring DAR), I guess that I don't want to reduce markup by any more.
Or should I continue reducing the markup until demand approaches my capacity?
I'm assuming that the maximum price I could export oil for is approximately equal to the WM price (or slightly less), as why would anyone buy my oil when they could purchase it from the WM cheaper?
I'm in the process of experimenting with this but am just wondering if anybody knows these things..
I would suggest ignoring world market price when setting your domestic prices. It's all about demand, as Il Duce has correctly pointed out. If you want to get your demand to increase then decrease the domestic prices until you see demand for products go up. If you want your demand to decrease then you should increase the domestic price enough to cause demand to decrease.
It takes a bit of experimentation to get the hang of a particular region's economy. You should expect to make a few dry runs to get the hang of your economy and what you should do. How much investment in efficiency do you make to make the cost go down to make the domestic price go down?
I had been playing Southern California in the US-California scenario and had a dickens of a time getting GDP/c to increase through increasing domestic sales demand. Then after update 4 I decided to try the US in the World scenario. I was really happy to see my GDP/c go up the very first day and thought this would be a piece of cake economically speaking. After 27 days I was broke as I burnt through my $76 billion treasury really quick. I found that I had to start increasing domestic prices to quench demand, especially for consumer goods. My demand for consumer goods far outstripped my production and I wasn't able to buy from the other regions at reasonable prices. My autobuy was buying consumer goods at an exhorbitant price and I actually turned it off. I had serious shortfalls of consumer goods which makes the people unhappy.
Also look at your production and resource facilities. As one player pointed out in a post I read you don't want facilities that are at less than 10% in size/condition. It's better to trash those little facilities and upgrade other facilities to 100%. That way you keep production costs down which improves profit potential. You may also want to downsize whole industries if you have overproduction and you can't export the surplus.
The other key to economics is research as you need to spend plenty on increasing your tech level and also invest heavily in education through social services to increase your literacy rating to help increase your GDP/c. Lots of interactions between various departments means there's no one set policy to get your economy rolling.