I could be wrong, I am only going by what I know as economical logic. If you've 10 items and 100 people, the price will be high, when you have 1000 items and still only 100 people wanting it, the price will plummet to the point it's not even wanted. On the other hand if you've 10 items and 100 people, but then have 1000 items and 10000 people still wanting it, your prices shouldn't change much as the supply to demand ratio remains the same, which means the item's rarity/value hasn't changed.
As for why to bother, well, the easiest example I can think of is high level HQ craft gear. For instance, let's say I have crafted a Hexed Coif -1, rare item, hard to craft, tons of optimizing mages want this item. Not only is it rare to have one crafted that I could buy on the server but it's likely never going on the AH due to the fact no one on the server could/would afford it and the crafter would have to put it back up several times at high cost to themselves. If you merge all of the servers however you open a much larger market, now where my server may not have crafted one or people may not have put it up due to lack of people to buy it now I've many servers of people in which to buy it from. The people crafting this item now have the same cost to put it up, but so many more people who may be willing to buy it so they should have less issues with putting it on AH as you're not only potentially selling to 20 people who want it on your server but 200, and so on.
Basically rare items would be found on the AH more often, and lower demand items could easily find their way on the AH more frequently since it wouldn't necessarily be a wasted slot.
I admit I could easily be wrong and it could be a disaster as you explain just from what what I know I think it'd be better for people wanting rare items while still giving a balanced price due to supply/demand.


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