It's a self-correcting system, in theory but unfortunately it's also self-defeating at the moment. Merchants like the previous poster don't want to bother moving their retainers to the correct wards, selling in the right place, because people still buy from them in the "wrong" wards, and many folks won't bother going to the correct wards because the merchants are still selling their items in the first couple wards.
Until merchants start selling regularly in the correct wards, buyers will have no reason to go there, and vice versa.
On the other hand, when people start trying to use the wards as designed, then it should start to correct itself, as you'll start having merchants unable to sell out-of-ward because people who want to buy are going to the correct wards, and people go to the correct wards because there are people selling the correct items in them.
I suppose the taxation is meant to be a nudge in the right direction, give merchants a reason to use the correct wards, but it might not be a strong enough nudge at this point.
I tested your theory last night and moved my retainer to the appropriate ward and filled them up with only selling items related to that ward at prices below market price and just slightly above vendor price, where applicable.
The result? This morning zero items sold.
I switched them to the second ward on the list, keeping the same items at the same prices. In just five hours I've sold half my goods.
Sorry folks, but the sellers aren't going to go where there aren't any buyers. You can stomp your feet and gnash your teeth all day long about how we're "not doing it right" but in the end all that matters to me as a merchant is selling my goods.
I will say that it is annoying to see retainer upon retainer selling useless junk for prices that indicate to me the player has neither done their research nor hasn't the slightest clue about economics.
Marmot meat supply is off the charts meanwhile there's little to no demand for it, that item is not worth 1,000 no matter how long you stand there with it in your retainer. Furthermore, most of the fish from the beginning areas have no use right now outside of being turned into River Sand, another item in extremely low demand. I'm not paying 1,500 gil for that Tree Toad I fished up a dozen of a few minutes ago to turn it into River Sand.
Look up your items and see if they're even used in a craft right now before you go cluttering up your bazaar with them for ignorant amounts of gil. Edited, Oct 17th 2010 1:20pm by Whales