Market ideas, and how to fix it.

I've gotten the comment that you shouldn't fix what's not broken. But I can honestly say, the market system here is causing quite some instabilities. So I just thought I'd put this up here after looking around at some of the posts.

1. Taxes - There is not currently a meaningful, immediate charge. There's no point in having a separate listing and selling fee when in actuality it's just put into one. There is a reason for having a listing and a buying fee, and it's sole purpose is to stabilize. Not a difficult concept to understand.

2. Undercutting - I'm not here to bitch about all the players that undercut. Undercutting doesn't ruin a market, but price changes on a whim do. You'll find undercutting everywhere. The only thing that means is that your listings take slightly longer to sell. You're still getting more money. Allow undercutting, but don't encourage it by not having a listing fee, as I've mentioned above.

3. Supply and Demand - As it is now, there is no way to place orders and the only way to test for demand is to find a slightly empty market, take a look at the recent history, throw some things up for a price on the higher end (or sometimes slightly higher than the lowest, depending on supply) and hope it sells in a reasonable time. Ability to place buy orders would help know what the majority is willing to pay.

4. Quantities! - A suggestion would be to create a "pool" with all the items currently listed, separated only by HQ/NQ. Let's say you want to purchase a stack of something, but there are different quantities listed at different prices. Simply show a list of the 8-10 lowest prices. You should be able to still order 99, but when you place an order have a system that calculates the cost incorporating ALL of the prices within the first 99 items listed at the lowest prices.

Similarly, if you're a seller, you should be able to see 8-10 of the highest offers.

5. Selling/Buying options - With the above system in place, you should not be able to place orders for an item that is lower than the NPC buyback price. Likewise, you can't sell for lower than that either. The default price should be blank, with two options while selling: "match lowest price" or the ability to input your own price, with a quanitity field. When buying, "match highest offer" or a custom input field, and a quantity field of up to 99.



This creates an auction system in which you can place buy orders, fill existing orders, and sell your items efficiently. Yes, it's a "playable" market that people can sit there and make money just by flipping items for minutes a day. But it also gives you a better idea of what the actual demand of an item is, and you can farm/craft accordingly. Playable or not, it's a lot more stable than what exists now.

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Originally Posted by Chauve

Similarly, if you're a seller, you should be able to see 8-10 of the highest offers.

5. Selling/Buying options - With the above system in place, you should not be able to place orders for an item that is lower than the NPC buyback price...

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Number 5 starts to solve some issues. If an NPC buy back is the same price as a market listing those items should just be absorbed into the NPC market as the NPC would flip it for a profit. Some equilibrium between NPC item supply needs to be met, as having an infinite supply and NPC's not sourcing goods from the market makes no sense. This could stoke market participation by making gathering, and GC turn-in's more important to the over all stability of the economy. Right now there are 2 economies NPC and Player (through the market boards) and even a different/competing currency seeing as tomestomes are used to buy gear at end game. I wish there was more synergy between NPC and the player economy. But 5 starts to address some odd market behaviour.

#1. No, the fee is not what you think it is. It is a gil sink fee and removes gil from the market. In any mmo, the amount of gil that enters the market must also be removed from the market to keep the game healthy. If gil is not removed from the game you get a pile up of gil and inflation of prices. Anyone new and entering the game would never be able to afford anything in the game. We eliminate players into the community thus hurting the game. This scenario has been seen thousands of times over countless MMOs. This is why the term gold-sink came into existence.

At the same time, gil must enter the community at the same rate it is being destroyed or there will be no gil eventually over time. Adding a fee to any item sold is a great way to remove gil. If you've seen MMOs since the dawn of their time, you would know that listing fees of any type is a gil/gold sink feature. Like these FC houses which will be gigantic gil sinks.This should be common knowledge.

#2. Initial Listing fees don't help. It actually hurts the people who are actually complaining about it the most atm. It discourages those who,depend on what few items they have to sell, because they can't afford to re-list. Any undercutting forces them out of the market because they can't afford to re-list without taking loses. Its even worse when casuals undercut one another, the only guy who wins is the one at the bottom, therefore the "X" amount of casuals above him are pretty much boned. There are tons of other MMOs with forums with 100 page long threads discussing the problems with initial listing fees. Without initial listing fees they can atleast compete fairly. The importance of casuals is that they are a majority of the community these days and therefore drive a good portion of the market and game as well. You kill them, you kill the game.

#3. You contradict yourself. You state there is no way to know what the supply and demand is but then you state the recent transactions history list. That alone is plenty. If used and studied properly it is already too dangerous.

These 1,000 word posts are rather annoying lol.

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Originally Posted by Xystic

#2. Initial Listing fees don't help. It actually hurts the people who are actually complaining about it the most atm. It discourages those who,depend on what few items they have to sell, because they can't afford to re-list. Any undercutting forces them out of the market because they can't afford to re-list without taking loses. Its even worse when casuals undercut one another, the only guy who wins is the one at the bottom, therefore the "X" amount of casuals above him are pretty much boned. There are tons of other MMOs with forums with 100 page long threads discussing the problems with initial listing fees. Without initial listing fees they can atleast compete fairly. The importance of casuals is that they are a majority of the community these days and therefore drive a good portion of the market and game as well. You kill them, you kill the game.

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An initial listing fee, which is the standard of many MMO's reduces undercutting two ways.


First, it prevents people from knee-jerk undercut spirals that are caused by person A selling something, person B posting at a lower price, then person adjusting under that new price, then person B adjusting even lower.

Second, it motivates sellers to price items at realistic levels that more accurately reflect the demand for their wares. If demand were sufficient for their goods, people would be bought out before other sellers could notice the downward trend.

This means a 'casual' could check the price history for his/her items, then see the prices of items currently available, then put his goods up for a price they know would be met within a reasonable amount of time.

As you mention the people being 'boned', this happens because everyone can adjust their prices williy nilly without allowing them to settle.

There is no realistic value. I don't know where you are getting that from.

If there are 5 people in one market and there are only 2 customers who are going to buy 20 pieces/week:

A- 5 item
B - 6 item
C-100 items
D - 10 items
E -15 items

On the market board and we know that the cutoff price for profit is at say 40 gil.

A - x2 - 100 gil
B - x3 - 90 gil
A - x3 - 88 gil
B - x3 - 80
C - x10 - 77 gil
D - x5 - 56 gil
C - x10 -55 gil
D - x5 - 50 gil
C - x10 - 45 gil
E - x10 - 44 gil
C - x10 - 43 gil
E - x5 - 42 gil
C - x10 - 41 gil
C - x10 - 41 gil

Now C doesn't have to worry at all because he doesn't need to relist, hes making money period and now controls the market. Everyone above him is boned because if they had to relist with a 5% fee, they would be losing gil. We've seen this situation 1 too many times.

I think an initial listing fee would keep people from listing stuff at or less the prices that an NPC would buy an item for. It might also make people think before what they list an item for.

Quote:

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Originally Posted by Xystic

There is no realistic value. I don't know where you are getting that from.

If there are 5 people in one market and there are only 2 customers who are going to buy 20 pieces/week:

stuff

On the market board and we know that the cutoff price for profit is at say 40 gil.


stuff

Now C doesn't have to worry at all because he doesn't need to relist, hes making money period and now controls the market. Everyone above him is boned because if they had to relist with a 5% fee, they would be losing gil. We've seen this situation 1 too many times.

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A realistic value, is a price at which an items could reasonably be expected to sell at.

Lets look at your example then.

For your example, you state the DEMAND for the item is 2 buyers, at 20 pieces each, per week.

This means demand is 40/week.

You have suggested in this market, there are 5 sellers, with a total SUPPLY of 136 items.

This means that supply is more than triple demand.

As a side note, you said the minimum sales price for a profit in this market is 40g.

Knowing that the market is flooded with items, any price above 40g is unrealistic.

Seller A and B have far over priced their items and deserve to be 'boned'.

Seller C has a large overstock of the item, and can control the market price. He would be better off listing all his items at 40, and try to move his surplus.

Seller D's prices are a little above what the market supports, but should demand spike, his items should sell as well.

Seller E is at a reasonable price point, but lacks the surplus of seller C, so he will likely have to wait him out, or undercut below the profit margin to move his wares.

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Originally Posted by Chauve

1. Taxes - There is not currently a meaningful, immediate charge. There's no point in having a separate listing and selling fee when in actuality it's just put into one. There is a reason for having a listing and a buying fee, and it's sole purpose is to stabilize. Not a difficult concept to understand.

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Currently items are taxed upon the sale. If taxes were changed to being immediate upon listing, i can guarantee you 100% that the total amount of tax overall in the game will increase. By doing so you also increase the dead weight loss of the market, which means the market is operating less efficiently and it will not be able to reflect prices dictated by supply/demand or changes in supply/demand as fast and accurately. Because of this you'll actually create the opposite of what you are attempting to do. What will happen is the market supply/demands can not correct each other as fast or easily to any changes and you'll end up causing price to have larger price gaps between them. A slower market is a bad thing because there are more and larger price discrepancies.

Also it will not be possible to place a tax on when an item was posted, and here's why:
let me just place something that's actually worth 10k gil for only 100 gil, get a 5gil tax and then immediately readjust my price up to 10k.
Now instead of paying a 500gil tax i only paid 5gil in taxes and avoided the other 495gil.

In order to avoid this situation, in addition to a tax on listing, you must also either have one of the following:
-A tax on price adjustments as well
-A cooldown on price adjustments per item
-Not allow you to adjust prices at all, so you must take it down then relist it and pay the listing tax again.

These are all bad for the market and will increase dead weight loss, make it lose effeciency, become slow so it can't properly reflect actual supply and demand as it will be caught in the past, and create larger price gaps.

Quote:

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Originally Posted by Chauve

2. Undercutting - I'm not here to bitch about all the players that undercut. Undercutting doesn't ruin a market, but price changes on a whim do. You'll find undercutting everywhere. The only thing that means is that your listings take slightly longer to sell. You're still getting more money. Allow undercutting, but don't encourage it by not having a listing fee, as I've mentioned above.

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A listing fee is a terrible idea for the above reason I just gave. If you can't compete with the ever changing market trends then sorry but that's competition for you.
Also, I'll let you on a little hint. If your idea was still imposed, you'll still be undercut by people currently entering the market and their are no barriers to enter the market. People will still undercut you just as often, all the people just listing items for the first time. So guess what happens, you still end up being undercutted, no one will end up being from you because they're buying from the undercutters who just posted their listing, and you can't adequately compete with them cause your stuff is already posted and you'll have to pay extra or wait longer to undercut them in response. So basically you just shot yourself in the foot.

Quote:

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Originally Posted by Chauve

3. Supply and Demand - As it is now, there is no way to place orders and the only way to test for demand is to find a slightly empty market, take a look at the recent history, throw some things up for a price on the higher end (or sometimes slightly higher than the lowest, depending on supply) and hope it sells in a reasonable time. Ability to place buy orders would help know what the majority is willing to pay.

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You can also check the history, not many people seem to know there's an option to look at the previous history of bought items. If you see a lot of people are buying something at a certain price, or if not many people are buying another thing, that also gives you an idea into what the demand looks like.
Although I'm all for placing buy orders, I think it'd be a nice function to have, and it's more accurate to look at demand that way then checking the history. But just keep in mind you can still get a picture of what it looks like still.

Quote:

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Originally Posted by Chauve

4. Quantities! - A suggestion would be to create a "pool" with all the items currently listed, separated only by HQ/NQ. Let's say you want to purchase a stack of something, but there are different quantities listed at different prices. Simply show a list of the 8-10 lowest prices. You should be able to still order 99, but when you place an order have a system that calculates the cost incorporating ALL of the prices within the first 99 items listed at the lowest prices.

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I would like it if they placed NQ on one side and HQ on the other side. It'd just make the lists look so much more organize than having to scroll down to find HQ stuff or opening another box to tick a box to show only HQ.

Quote:

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Originally Posted by Chauve

5. Selling/Buying options - With the above system in place, you should not be able to place orders for an item that is lower than the NPC buyback price. Likewise, you can't sell for lower than that either.

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Essentially what you'll be doing is setting a price floor below (for most items) or at equilibrium (for some items) which would be redundant. So in the end this would make literally no difference, and nothing will change by it. SE can do it if they want, but it's not going to have any real effect on the market.

Quote:

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Originally Posted by Chauve

This creates an auction system in which you can place buy orders, fill existing orders, and sell your items efficiently. Yes, it's a "playable" market that people can sit there and make money just by flipping items for minutes a day. But it also gives you a better idea of what the actual demand of an item is, and you can farm/craft accordingly. Playable or not, it's a lot more stable than what exists now.

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I like the idea of placing buy orders but that's just about it.
The idea on taxes would actually make the market less stable.

Quote:

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Originally Posted by Kazamoto

An initial listing fee, which is the standard of many MMO's reduces undercutting two ways.
First, it prevents people from knee-jerk undercut spirals that are caused by person A selling something, person B posting at a lower price, then person adjusting under that new price, then person B adjusting even lower.

Second, it motivates sellers to price items at realistic levels that more accurately reflect the demand for their wares. If demand were sufficient for their goods, people would be bought out before other sellers could notice the downward trend.

This means a 'casual' could check the price history for his/her items, then see the prices of items currently available, then put his goods up for a price they know would be met within a reasonable amount of time.

As you mention the people being 'boned', this happens because everyone can adjust their prices williy nilly without allowing them to settle.

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As I mentioned previously, it's a terrible idea to have a tax on posting. also, what's considered a realistic level price, who decides that? Also, please explain to me how a slowed market with larger price gaps is considered a more accurate market.

Quote:

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Originally Posted by Orophin

I think an initial listing fee would keep people from listing stuff at or less the prices that an NPC would buy an item for. It might also make people think before what they list an item for.

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Okay, let me just place something that's actually worth 10k gil for only 100 gil, get a 5gil tax and then immediately readjust my price up to 10k.
Now instead of paying a 500gil tax i only paid 5gil in taxes and avoided the other 495gil.
If you're going to place a tax on posting, then the game will have to either force you to pay a tax per price adjustment or not allow you to adjust price or place a cooldown on price adjustments.


The only one here who gets it is Xystic.
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Also for those who don't know, you can bypass the 1000 character limit by copy/pasting what you typed and then posting, then editting your post. the post edit will let you exceed the limit.

@Zigkid3

You seemed to miss my last post.

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A realistic value, is a price at which an items could reasonably be expected to sell at.

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And as highlighted in my breakdown of this example, a reasonable, or realistic price is driven by supply and demand, your two old friends.

And we have had this debate a number of times. And yes, you seem to have a clever work around there. But as was acknowledged in a number of other threads, there would be an additional, smaller, fee for price adjustments, or the same fee to match the new price.

For the sake of a new angle on this argument.

How often do you see people use the price adjustment feature to move their prices up?

Assuming market forces work as they rightfully should, there should be situations where it would make sense for a seller to increase his prices.

I know it would likely never happen, but if a dev were to give us the total number of times a person adjusted their asking price UP, I seriously doubt that would be a very large number.


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Additional side note.

WoW
LoTRO
EQ
Rift
DDO (<- Free to play even)
EvE (<- Best virtual economy in existence at this point)
City of Heros
FFXI

All these games charge the 'tax' or fee when the item is listed, not when it is sold, yet all have fully functional market places. Funny how that works.

Quote:

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Originally Posted by Kazamoto

Snip

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So in your definition your saying that their is a restriction on labor cost. If anything is higher then so much above the cost to make the item, it is considered unrealistic. However, that idea in itself is unrealistic. You are trying to put a set value for labor cost, which cannot be done. The cost of labor is also determined by supply and demand and the seller, therefore you can not have a set number that says this is what is consider realistic. That is a strange idea and concept. Neat but no.

Because your concept can't exist, you can't prevent the casuals from getting locked up by "C" because how do they know what the value for labor is? Versus a non-initial fee, everyone can atleast repost at 40 gil and have a chance to make 1 gil in return. The current system still protects the casuals from being blocked out of the economy while a initial fee system guarantees the death of casuals.

So you're saying people flooding the market with crafted stuff less than what an NPC would buy it for is realistic?

Quote:

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Originally Posted by Kazamoto

@Zigkid3

You seemed to miss my last post.


And as highlighted in my breakdown of this example, a reasonable, or realistic price is driven by supply and demand, your two old friends.

And we have had this debate a number of times. And yes, you seem to have a clever work around there. But as was acknowledged in a number of other threads, there would be an additional, smaller, fee for price adjustments, or the same fee to match the new price.

For the sake of a new angle on this argument.

How often do you see people use the price adjustment feature to move their prices up?

Assuming market forces work as they rightfully should, there should be situations where it would make sense for a seller to increase his prices.

I know it would likely never happen, but if a dev were to give us the total number of times a person adjusted their asking price UP, I seriously doubt that would be a very large number.

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we must've posted around similar times.

as for adjusting prices up. I've done it a couple times, and I'm sure people do it sometimes as well. Of course most of the time most price adjustments will be to decrease the price. because to adjust price up would mean say you have the cheapest item on the board right now cause you're undercutting, but a buyer buys stuff in the middle of the list rather than the cheapest for some reason (maybe the quantity amount or for HQ stuff). So it does happen, though not as often.

What drives the prices is if say someone bought out most of the cheaper end goods, the higher up the list they go, the higher the price. by buying up all of the cheaper stuff on the bottom they're driving prices back up because they have increased demand for that item.
higher demand = higher price
lower demand = lower price
higher supply = lower price
lower supply = higher price

supply/demand determine the price, not the price adjustments. when people adjust the prices, they are merely reflecting the price determined by supply/demand.

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Originally Posted by Orophin

So you're saying people flooding the market with crafted stuff less than what an NPC would buy it for is realistic?

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And why are you not taking advantage of this? If its less then the value of the NPC vendor price, you can buy it all out and make the profit from it, even if you just vendor it.

So your complaining because you can make some gil or is it that its undercutting your market so badly, your items are worth nothing?

Quote:

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Originally Posted by Orophin

So you're saying people flooding the market with crafted stuff less than what an NPC would buy it for is realistic?

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if people sell anything at or even less then what the vendor will give for it on the market board, then they must have a real lack of brain cells.

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Originally Posted by Zigkid3

A listing fee is a terrible idea for the above reason I just gave. If you can't compete with the ever changing market trends then sorry but that's competition for you.

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As you quoted in your post, but may have not read or not understood...

I could care less about undercutters. I list around middle anyway. There's no point in listing below the lowest price when those are going to sell almost immediately.

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Originally Posted by Zigkid3

Also it will not be possible to place a tax on when an item was posted, and here's why:
let me just place something that's actually worth 10k gil for only 100 gil, get a 5gil tax and then immediately readjust my price up to 10k.

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I thought I had posted it here, but I guess that was in a different discussion. The idea is to force you to relist an item, as done in many other auctions in MMOs. I'm comparing it the system used in many other games. (tax/relist)

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Originally Posted by Xystic

#3. You contradict yourself. You state there is no way to know what the supply and demand is but then you state the recent transactions history list. That alone is plenty. If used and studied properly it is already too dangerous.

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Gold sink, yes. But it still stabilizes prices and discourages sporadic changes in price. I also don't believe it would hurt people that are complaining about it, or casuals. If you're early on in the game and don't have a lot of gil, you're going to be selling cheap items anyway. As you progress, it evens out if you're managing properly.

Secondly, I don't believe I contradicted myself. I specifically said there was no way to place buy orders to test demand. Buy history does not accurately represent demand, and yes it is dangerous. The buy history shouldn't even be there. That alone is going to cause long term problems. Reread my post--you misread this the first time.

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Originally Posted by Chauve

The idea is to force you to relist an item

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As I've explained, this is a terrible idea.

Here's a link on my rebuttal regarding some of OP's comment: http://forum.square-enix.com/ffxiv/t...80#post1529780

=on ops pt4 & 5=
I love the quantity purchase idea, getting tired to click through multiple lines to do bulk purchase. Also, like to have a buy option, but the restrictions proposed is pointless and doesn't change anything. I really don't see the point of a price limit as it has no impact on the market...only on the poor fool who does it. We do not need to babyproof the game.

=on pt3=
as Zigkid and Xystic puts it, you can view it from history, but that won't be accurate if it is actively traded. You'll have to do what the good old traditional trader do...feel the market. You don't have to actually trade in it, but it does gives you an indication on the price movement when you're offline. Would love to have a monthly/annual transaction graph like Eve though, but then everyone would have the same information. It all boils down to how much information you can extract from it relative to other traders. The one with more information usually wins.

=on pt2=
undercutting = competition = good for consumers. Supply/demand for any mats in the game is not constant, thus price fluctuates, in which people perceives it as volatility. Miners don't mine for a stack and then post it...they mine for hours and post all of them...that's where you have a price crash. Slow moving items like non star armor moves slowly, thus people are more willing to undercut by a larger quantity to sell first. Undercutting below cost price makes sense because ppl gain xp for crafting, and they are willing to pay the difference in cost for the xp gain for slow moving items.

=on pt1 and most of the other player's comment=
There are no 'realistic price' or whatever that means in any market. It's all relative to a particular player. There is however an equilibrium price determined by the current supply and demand, and that price is not static. In layman's term, it changes all the time.

Listing fee introduce this economic mechanics called sticky price. Meaning price change is not as responsive to changes in the equilibrium price. Because of that, we get smaller swings as Kazamoto has stated. However as Zig pointed out, it encourages players to list their price closer to the equilibrium, so we can expect massive initial undercutting. As Xystic points out, those not at the lowest price will be boned...so uncompetitive sellers will still be boned under this listing fee system.

It can be viewed as good because of the smaller volatility, but the consequence of that is that it takes the price longer to react to the ever changing market condition. If looking at the economy as a whole, this is where the economy losses efficiency, deadweight loss as Zigkid puts it. When designing an economy, we want to look at the economic efficiency as a whole. Another item to examine is what causes an item's price to spiral downward from undercutting? I would say it's the number of players and the initial price was too high. I see a lot of that in Malboro, but not too much in Tonbery. Why? Because there's more active players in Tonbery. So in a way, the root cause of spiraling price is player numbers. In all, is it worth the hit on economic efficiency to implement listing fees?

The reason why players find it hard to make money in the market is because they are less competitive. Should we put in mechanics to make it easier for them to make money? Or should we force them to learn? If we're going to make everything easy, might as well call this game Final Farmville 14.

I understand that players are familiar with certain mechanics form other MMOs. In your definition it's working, but I'll bet I can find other that disagrees. I'll also bet that if this game started with listing fees, there will be more post crying about the listing fees. It's all too easy to propose a bandaid solution without understanding how the economy works, and that's dangerous. Small changes can have massive effect on the economy. I'm will always be a proponent of a free market with limited artificial constraint.

^
The only part of the above I disagree with is your statement about 'no realistic price'.

Or, at least how you interpreted what I said.

Every item has a realistic price. And that price is a moving target, based on supply, demand, and recent sales.

If there are 1000 of something on the market that are selling for 400g. Then listing your item at 600g is unrealistic. Equalling so, listing at 400 might not be a realistic price to list at, depending on how quickly you need the item to sell.



There are 3 price points to every item that people should keep in mind when listing an item for sale.

Realistic price: Would my item sell at this price, with current market conditions?
Current sales price: What are other Items on the market selling for currently.
Reasonable price: Any price that is above cost to produce. (unless selling to cut losses or move surplus)

None of these price points are a set value, and are constantly in motion. But all 3 should be considered before you list an item.

But who am i kidding? The current logic is:

What is lowest item selling for? Undercut by 1-10,000 gil.

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Originally Posted by Kazamoto

And that price is a moving target, based on supply, demand, and recent sales.

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Recent sales, is, what provides you the information for supply and demand. Without it, you don't know either.

Quote:

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Originally Posted by Kazamoto

Realistic price: Would my item sell at this price, with current market conditions?

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This is where your contradicting yourself in your post.

Your definition states that in order for an item to have a realistic price it must be one that can cause the item to be sold in the current market conditions. 0-399 gil will cause that making undercutted values, realistic prices.

Your Logic:

A) 400 gil = Realistic Price
B) 400+ gil = Unrealistic
C) 0-399 = Unrealistic

Based off Your definitions:

A) 400 gil = realistic
B) 400+ gil = unrealistic
C) 0-399 gil = realistic

See the contradictions? If I recall you have been arguing for "Realistic Prices." But based off your own definitions, you are actually FOR undercutting.

I won't speak for him, but my understanding is that he is calling the marginal market price "realistic", and anything below that "reasonable"... meaning that the edge of realistic expectation of sale is the limit imposed by the market, while anything below that point can be deemed reasonable.

Above that price is unrealistic, or unreasonable - as, assuming supply at the market price, a reasonable consumer would not pay more than that price.

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Originally Posted by Kazamoto

^
The only part of the above I disagree with is your statement about 'no realistic price'...

If there are 1000 of something on the market that are selling for 400g. Then listing your item at 600g is unrealistic. Equalling so, listing at 400 might not be a realistic price to list at, depending on how quickly you need the item to sell...

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What you are refering to is Equilibrium price, which is a function of quantity supplied, and quantity demanded. We will never know the real supply and demand at any point of time, thus we can never truely know the equilibrium price. However, looking at the price history on prices that clears the market and the quantity that clears it, you can 'guess' the equilibrium price.

You keep looking at it from the perspective of a single or small number of people, where I look at the economy as a whole. In such case, only the equilibrium price matters and not the individual transactions, nor how a single person behaves. Economics can't model what a single person can/will do to price, but it can accurately predict how the whole population's decision impacts the price.

Taking your own definition 'realistic' with something on the market that are selling for 400g. I say selling at 600 is 'realistic' for me because I know that it will clear the market when I wake up the next morning. Selling at 200g is also realistic for me because I get to sell mine before yours, which is especially important when it comes to cornering a small market.

Economist looks mostly at equilibrium price for topics like this simply for the reason that other terms are subject to personal interpretation. Besides, from your own intepretation of it, 'realistic' price is a subject of personal preference. You've tried to introduce your own term on many of your other post and got flak from Zig and others for this sole reason. Many of your model/description/analogy contains so much flaws that stems from several fact which I can summarize as: viewing from a limited perspective, lack of understanding on how the economy work.

As much as it might sound like one, please don't take this as a personal insult as I was, not so long ago pretty much like you...until I discovered how much more that I don't know about economics. It totally changed my perspective on many things.

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Originally Posted by Xystic

#1. No, the fee is not what you think it is. It is a gil sink fee and removes gil from the market. In any mmo, the amount of gil that enters the market must also be removed from the market to keep the game healthy. If gil is not removed from the game you get a pile up of gil and inflation of prices. Anyone new and entering the game would never be able to afford anything in the game. We eliminate players into the community thus hurting the game. This scenario has been seen thousands of times over countless MMOs. This is why the term gold-sink came into existence.

At the same time, gil must enter the community at the same rate it is being destroyed or there will be no gil eventually over time. Adding a fee to any item sold is a great way to remove gil. If you've seen MMOs since the dawn of their time, you would know that listing fees of any type is a gil/gold sink feature. Like these FC houses which will be gigantic gil sinks.This should be common knowledge.

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Gil sinks are required, but they don't have to be a surcharge for listing an item. It's not a "great way to remove gil". It's an awful barrier to entry. Google "barrier to entry" if you're not familiar with the term. I've played MMOs since the dawn of time, although my primary source of information derives from about 2 decades as a regulator of monopolies.

WoW's auction house majorly sucks, as have all of its AH clones, with its onerous barriers to entry compared to EQ, EQ2, Eve Online, and more recently, Anarchy Online (relatively recent improved access to market), etc. lack of market barriers. What makes their markets work is the fact that items sold are useful, sometimes not trivial to obtain, and there are few barriers to entry.

Gil sinks are necessary, but put them elsewhere, anywhere but barriers to entry to the game's market.

What's causing FF14's markets to fail is the fact that there are so many people uninterested (or filling time waiting for a group) in the level 50 combat game that they are now crafting and harvesting instead. I'm on a relatively new server, and am making a ton of gil from crafting, but I don't expect that to continue. Adding barriers to entry would only make the problem worse, creating a situation where high level characters have the means to eliminate competition.

Low prices derive from the fact that level 50's have nothing better to do, which creates too much competition and reduces their incentive to pay other people to provide things for them that they should be too busy to obtain for themselves.

^^^This!

/10char

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Originally Posted by Tommara

Gil sinks are required, but they don't have to be a surcharge for listing an item. It's not a "great way to remove gil". It's an awful barrier to entry. Google "barrier to entry" if you're not familiar with the term. I've played MMOs since the dawn of time, although my primary source of information derives from about 2 decades as a regulator of monopolies.

WoW's auction house majorly sucks, as have all of its AH clones, with its onerous barriers to entry compared to EQ, EQ2, Eve Online, and more recently, Anarchy Online (relatively recent improved access to market), etc. lack of market barriers. What makes their markets work is the fact that items sold are useful, sometimes not trivial to obtain, and there are few barriers to entry.

Gil sinks are necessary, but put them elsewhere, anywhere but barriers to entry to the game's market.

What's causing FF14's markets to fail is the fact that there are so many people uninterested (or filling time waiting for a group) in the level 50 combat game that they are now crafting and harvesting instead. I'm on a relatively new server, and am making a ton of gil from crafting, but I don't expect that to continue. Adding barriers to entry would only make the problem worse, creating a situation where high level characters have the means to eliminate competition.

Low prices derive from the fact that level 50's have nothing better to do, which creates too much competition and reduces their incentive to pay other people to provide things for them that they should be too busy to obtain for themselves.

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a tax for gil sink isn't a barrier to entry. I don't think you fully understand the term.

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Originally Posted by Wikipedia

are obstacles that make it difficult to enter a given market.[1] The term can refer to hindrances a firm faces in trying to enter a market or industry—such as government regulation and patents, or a large, established firm taking advantage of economies of scale—or those an individual faces in trying to gain entrance to a profession—such as education or licensing requirements.

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You can technically count the tax as effecting economies of scale to enter a certain market, but that'd be a real stretch considering the tax is after the sale so you can already easily invest in selling certain items.

A barrier of entry for MMO's would be the following:
1) level of certain gathering/crafting classes. for example in WoW you're limited in the amount of professions you can have at a time. on top of that you have to take the time to level it to max level. for FFXIV anyone can level as many crafting/gathering classes as they like so there's no limit, however you still have to worry about leveling each one.
2) How much money do you have. the amount of gil you currently have may determine which markets you're able to enter, and how much strength you have in that particular corner of the market.

because this is an mmo, everyone can pretty much do anything if they wanted to. there's no complicated real life stuff to worry about. if you want to enter the undyed cotton cloth market for example, you can enter it at will and you can leave it just as easily. there's almost next to no barriers of entry, which is nice because it helps prices get to equilibrium. If a certain market is seen as profitable, people will easily flock to it because theres almost no barrier to entry if any at all. people will continue to join that market until there's no profit to be gained. if it's too costly then people can just as easily leave that market.

Actually it is a barrier to entry. A tax is akin to a regulation. Furthermore, a listing surcharge like the one mentioned requires upfront payment to list in the market.

It is a pristine example of a financial barrier to entry in a market.

You might have product and no money- you can't make the surcharge hurdle to list your products in the market- you've been excluded thanks to the barrier.

I don't really understand where people are coming from on this whole "barrier to entry." I think it's safe to say that doesn't apply here. Not being able to enter the market due to not knowing how to manage doesn't make something a "barrier" exactly. Maybe a specific PART of the market, but you shouldn't be running into issues with not being able to afford the tax of what you're selling anyway. You work your way up, like with most other things.

Gotta spend money to make money.

Irrespective of whether it is a barrier to entry or not (if you define the "market" as "selling any good on the market board" then I guess you could define it as a very low barrier), I still don't think that's a good thing. Any barrier to entry, however you define it, is designed to stop new entrants. Whilst the people who have already levelled a specific craft might benefit from that (low competition therefore an ability to dictate prices) that's not very fair on others. Imagine in an extreme example, 1 player had cornered the Culinary market entirely and the cheapest item of food was 1 million Gil. Is that really enjoyable? In the current market it can't happen because substitutes are available from NPCs at a fixed low price ( albeit they might be inferior ) and there is a low / zero barrier to entering production (you can level culinary yourself) which feels fairer to me.

I think what you are really advocating is that in a the markets you are active in, you don't want any competitors but you want the advantages of low priced goods and efficient, competitive markets in all the others. Unfortunately every time there is a thread about undercutting that it what it amounts to - it's just not going to happen.

You can also avoid that "barrier" because it doesn't apply to production, only on sales, and it only applies to sales on the market board. I think it would lead to more crappy shouting spam in towns which personally I think is a huge step backwards. Also, if it's a fixed % of an items listing value it's not really a good barrier because there is nothing to stop me listing and selling at 1G to avoid it (although that's likely to be unprofitable, there is nothing to stop me). A true barrier would make it impossible for me to make a sale (ie. you can only use the markets boards having cleared Bahamut turn 5).

Yes, essentially all of the conversations I have seen are people wanting to impose barriers, taxes, or other obstacles to keep people out of the markets where they participate... but when applied universally degrade the entire system.

It's a very myopic way to view markets and trading, and while the profit motive is understandable, I believe that these self interests would ultimately undermine the greater market interests of the game.

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Originally Posted by ApolloGenX

Yes, essentially all of the conversations I have seen are people wanting to impose barriers, taxes, or other obstacles to keep people out of the markets where they participate... but when applied universally degrade the entire system.

It's a very myopic way to view markets and trading, and while the profit motive is understandable, I believe that these self interests would ultimately undermine the greater market interests of the game.

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It's funny because this is so true from what i've seen on these forums.

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Originally Posted by ApolloGenX

It's a very myopic way to view markets and trading, and while the profit motive is understandable, I believe that these self interests would ultimately undermine the greater market interests of the game.

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Perhaps that's most people's reasoning...but again, back to my earlier point. I personally don't really care about adding taxes as much as trying to prevent prices from jumping all over the place. Looking at the history of various items, they're all over the place and change way more frequently than they should. Not saying this is how everyone else is thinking, just my perspective.

Yes, I have my own "niche" markets that I mess around with. But people entering that shouldn't throw anyone off--just find another and wait for it to die down. All I want at the moment is some sort of stability in the market. And a little bit of added functionality, QOL nonsense and the like.