I wish I was smart enough to make models, but I don't think the current stack mechanism is significant deterrent to this. Prices can still crash quickly in the current system. I feel the lack of tax / fees is a larger contributor. There is no penalty for listing and relisting.
As for the eventual downward spiral of prices, I do agree the lack of item destruction plays a role in this. Thinking back, I recall that GW2 had a similar problem. The solution was to make a material dump via the mystic forge. Basically you'd dump a lot of material in and get some bits out. I don't remember what you could get out. Again, I don't think the current stacking mechanism helps with this. The issue is a systemic one based in game design and there really isn't good way out of it. The lack of buy orders may play a larger role in preventing the downward spiral.
