Thank you Eliminex, too :) I'm glad to see that someone else here also has a grasp of how markets work.
I don't mind boriss thinking what he wants to think, and I really don't want to get into a flame war so I want to make it clear that I'm not attacking boriss at all. A lot of principles in economics are counterintuitive and strange, so unless you've gone through and given them a very thorough analysis it's easy for even intelligent people to make incorrect conclusions. The reason I'm going to pick apart what boriss said is not to attack him in any way, it's to clear up any confusion for people who have read his statements and were convinced by his incorrect arguments.
This is not a real market. In no way does the online game markets apply to real world markets. Coming in, saying you have a degree means nothing. Do people in real life have unlimited time, money and resources (from a single players perspective on RMT)... no they don't.
This is completely wrong. Entirely. 100%. Supply and demand is the
driving force for AH prices. Square Enix isn't setting the prices on the AH, people are. They're engaging in rational, bilateral transactions, and it's these rational decisions that set the prices for goods in the market. Here's the Wikipedia page on Supply and Demand--boriss, you should read this in its entirety; i think that it will explain a lot
. Adam Smith's invisible hand is as active as ever in the world of videogames. If anything, actually, basic microeconomic principles apply to videogames even more
than they do to the real world. In the real world economic models are limited because they're abstractions from very complex systems. In videogames, though, those systems aren't nearly as complex--things like all goods (or items) being perfectly interchangeable makes things much more elegant, and much better described by economic models.
Applying these principles to a game just doesn't work. Trying to justify that linking all servers will balance the economy is absurd, trying to tell me i don't understand without explaining yourself just furthers proves my point that you have absolutely no idea.
Well I'm explaining now so :P
1) There is no risk: You do not lose anything if you raise the price neither does anyone else except time(and from RMT's perspective they can list/buy 100 things of one type and skyrocket the price)
The first half of this statement is true (that there isn't any risk besides the loss of time), but the conclusions that are drawn in the second half of this statement are very incorrect. Why don't RMTs dominate earth crystals and set the price to a million gil? The answer is easy: because they'd have to buy every earth crystal that anyone ever lists in order to dominate the market. This is why a cross-server AH would help fight RMT--it makes it much harder for them to monopolize items. They'd need 20 times the resources to dominate the price of item if the market wasn't confined to a single server, but rather was pan-server.
2) You make it 10x easier for RMT to control the market. Before RMT had to have a different account for every server to do things in sync. With having 1 market they can do it all whenever they want and impact every server.
See my last post on why it would, in fact, make it much harder for the RMT to control the market.
3) Playerbase will force prices higher or lower. Something will be common on one server and not on another. Right there people will drive the economy higher to get it. In order for them to afford this item they force the prices higher.
See, this is where you're wrong. You're still under the assumption that you can "force" prices higher. Unless you have enough of a presence to gain any market power you can't "force" the prices to be anything. And in smaller economies (server-wide) it's much easier to establish market power--if the economy was pan-server, it would be ridiculously harder. Competition, my friend, competition.
4) By linking everything you destroy the supply and demand cycle completely.
FFXI took care of this by having different AH's, hence why higher end armor was significantly cheaper in jeuno whereas bonecrafting items in Windy were sometimes expensive and hard to come by
The reason why items on Windy's AH were more expensive was because Windy's AH was smaller haha--this is a perfect example to prove my point. Because Windy has a smaller market it's a lot easier for people to get market power and set prices higher than the perfectly competitive market equilibrium price. No completition = sellers can jack up the prices (because unless buyers are willing to hoof it to Jueno there's no one else that they can buy from--they have to pay the high price or go without the item).
5) Farming for certain items will go out of control, saturate the market and destroy any type of supply/demand there might have been. Guild events may be popular on one server not much on another. Heck everyone might fish on one server and not on another... that's not my problem why should i pay for it?
Yar XD. Saturate the market = not a problem. This would not "destroy" supply and demand haha, this is how supply and demand works. When there's an excess of supply, or a surplus, competition among sellers wanting to sell their goods drives the price down, and when the price goes down buyers have an incentive to buy more, and then there's no longer a surplus (or "market saturation problem").
And you'll have to explain the second half of that post: what are you paying for? Competition is making all the items you want to buy cheaper, and also making it so RMT can't dominate the market for any item... It doesn't sound like you're getting the short end of the stick haha.
If you come onto the market and see 1400 or even 14000 of any item do you think it's going to be worth much? WoW's market and even FFXI are influenced by people who significantly undercut 10-15 quantity of an item so they can sell it now, that also once again affects every server. Imagine 1000 players all undercutting each other at the same time, do you think thats stability?
Okay, this is a common misconception I've seen time and time again. Everyone out there: UNDERCUTTING IS NOT BAD. If, at the current price, the quantity that sellers want to sell is higher than the quantity that buyers want to buy, competition SHOULD force the price lower. Then, because of the price drop, buying the item becomes more attractive, and farming it becomes less, so the market surplus goes away. This competition is GOOD; it's the basic driving force of any healthy capitalist system.
So yes, when I see lots of players competing in a free market I say: that is stability! Eventually buyers and sellers will settle on a price where there's no shortages or surpluses; where the quantity that sellers want to sell at the current price is equal to the quantity that buyers want to buy. See, again, the wikipedia article on supply and demand :) Market principles are alive and well in the videogame world!
The only part i agree with you on is long term stability "could" be maintained... but we aren't looking for a game wide stability of the auction house we are looking for a playerbase stability.
I'm not sure what you mean by this XD
Well, that's all. And again, boriss, I'm not attacking you. Economics isn't always intuitive. Most people don't realize that rent controls cause housing shortages, minimum wages cause unemployment, and globalization and outsourcing are great
things for the overall welfare of all nations involved. Edited, Jun 19th 2009 5:11pm by Morsmorde