Just a couple of problems with the Market Boards.

[Kazamoto]

As always, and with many words, you ignore that fact that when ever items hit the magical equilibrium, a single seller can cause that price to spiral out of control.

A single sellers post, can disproportionally affect the average cost of an item because of the chain reaction undercutting we are currently seeing.

If there is an item with 5 stacks on the market, and a single seller undercuts by half, most of the sellers will then match or undercut that single new seller.

SUPPLY was not greatly increased, demand is unchanged, but the value as determined by market dropped significantly.

--

As for the tax at item listing, in real life, sales tax is applied to the consumer, not the business.
We have 'real life' sales tax now, when you are in one city, and buy from a seller in another.

The listing tax is representative of: advertising fee's (someone has to post your listing in ul'dah to limsa and grid right?), business taxes and license fees, labor taxes, etc.

The listing fee is there to purchase the service of using the market board.
In 1.0 and FFXI you could sell things from your personal bazaar and avoid these fees.

Time to inform the misinformed...

Sadly, while trying to be clever and insulting, you are only prattling off the same tired arguments that have been shot down repeatedly in a number of other threads.

And since we are trading back handed insults, your writing is poor and your paragraphs could use better spacing and structure.

[Zigkid3]

Sadly, while trying to be clever and insulting, you are only prattling off the same tired arguments that have been shot down repeatedly in a number of other threads.

And since we are trading back handed insults, your writing is poor and your paragraphs could use better spacing and structure.

'kay.
(more characters)

[Wazabi]

As always, and with many words, you ignore that fact that when ever items hit the magical equilibrium, a single seller can cause that price to spiral out of control.

As Xystic puts it, your definition of equilibrium seems to be a static price, but that is not the case.

Many misguided ideas about how the market works and how certain changes will affect the world comes from mis-intepretation or mis-understanding of some economic concepts. One single mis-interpretation can have a great impact on your conclusion. You seems to know a little about economics. If you have access to an economics professor, I'm sure he'll be more than willing to shed some light on this.

When a person undercuts by 50%, there are times that the horde will push the market price lower...that's what we call market momentum. However momentum is a short-run effect. Even at lower price, demand actually increase because the item is now affordable to more people. If it stays down at that price, that means people are still able to make a profit selling at 50% of the old price, and you were selling it too high to begin with.

Now, what's to say that your old price is the equilibrium or that the new undercut price is the equilibrium? Actually we as the players won't know unless we have the numbers and the mathematical skills to develop the model....at this point we can only guess by looking at how often an item clears the market at a certain price.

I'm indifferent towards tax at listing or tax at selling. You think that tax at listing will eliminate undercutting...but in reality, it only serves to hide undercutting. Supply and demand drives the price, tax...only a little. What will happen is that players will be more cautious about their pricing, and will try to sell at a price that has the highest probability of clearing the market, which means lower price...so Zigkid3 is right that it will drive the price towards equilibrium quicker. However, this also introduce what we call sticky price due to the cost associated with changing price (you were right about the real world relationship of this). What sticky price does is that the price level is less responsive towrads the change in supply/demand...meaning that if most people are posting at 100g now, but the equilibrium had shifted up/down, then the buyer/seller will lose out/gain...until the price level catches up to the new equilibrium.

So, it your motive of wanting a tax at listing is so that price level will hit equilibrium fast, kudos to you. If you want a tax at listing because you think it will eliminate undercutting and makes you able to sell your item for higher profit...then you're right for the wrong reason.

If I have to point of a problem with the market board, I would say it's the player's lack of understanding on how economics work. If you're still a student, just look around in your economic classroom and see how many people are dozing off...

[Kazamoto]

As Xystic puts it, your definition of equilibrium seems to be a static price, but that is not the case.

I only defined it as such, in my example that assumed demand was unchanged and supply was only changed to a very minor extent.

However momentum is a short-run effect. Even at lower price, demand actually increase because the item is now affordable to more people.

In the real world this is true, there will always be more buyers and investors willing to buy items given the right price. In the game (and without buy order options) unless someone is regularly checking the prices, demand would not necessarily increase just because the price went down. This early on, there is only so many crafters, or people leveling certain classes that have need at any one point.

Just because the price of 'Woolen underpants of itchiness' has decreased, it does not mean that there are more people who are leveling underpants gnome of the correct level to use the item.

In a higher turn over market, there may be market speculators that buy up a stock at low price assuming the value will go up, I'm doing this with some items in preparation for 2.1

Another example at the far edge of reality.
If someone could catch syphilis for $100 yesterday, and $25 today, is there suddenly going to be a rush on getting syphilis? Or is syphilis demand going to stay low no matter the cost?

If it stays down at that price, that means people are still able to make a profit selling at 50% of the old price, and you were selling it too high to begin with.

This makes the assumption that when undercutting, people still pay attention to if they are profiting or not.

I'm indifferent towards tax at listing or tax at selling. You think that tax at listing will eliminate undercutting...but in reality, it only serves to hide undercutting. Supply and demand drives the price, tax...only a little.

What will happen is that players will be more cautious about their pricing, and will try to sell at a price that has the highest probability of clearing the market, which means lower price...so Zigkid3 is right that it will drive the price towards equilibrium quicker.

It would not eliminate undercutting, but it would reduce knee-jerk price adjustments. As I have said, even if supply and demand are driving the price, it only takes one person who does not care about their own profits, to cause a downward spiral and destabilize an item.

Some would argue that more cautious pricing is a good thing, as it prevents sellers from using exorbitant mark ups.

Zigkid3 has repeatedly said that a presale listing fee would slow the drive to equilibrium.

However, this also introduce what we call sticky price due to the cost associated with changing price (you were right about the real world relationship of this). What sticky price does is that the price level is less responsive towards the change in supply/demand...meaning that if most people are posting at 100g now, but the equilibrium had shifted up/down, then the buyer/seller will lose out/gain...until the price level catches up to the new equilibrium.

I think the market should be slightly less responsive, this way undercutters can have their stock bought out without crashing an items value, and sellers would have a more difficult time trying to spike the price of an item.

So, it your motive of wanting a tax at listing is so that price level will hit equilibrium fast, kudos to you. If you want a tax at listing because you think it will eliminate undercutting and makes you able to sell your item for higher profit...then you're right for the wrong reason.

The tax, or fee to use the market board service pre-sale would do both, but it would not eliminate undercutting. Nothing will stop under-cutters, but it will reduce their impact on the market.

If I have to point of a problem with the market board, I would say it's the player's lack of understanding on how economics work.

There is a difference between a lack of understanding and a willful ignorance.
When people don't care, issues are caused. Internets are serious business.
Altana, I miss the EvE markets sometimes. The Jita spam...

[Wazabi]

*snip*

Price is the biggest factor for demand. Supply does not change demand directly...but it affects the price the item is being sold at, and thus affects demand. There's also this thing called price elasticity where every item has different level of sesitivity to price changes. All these applies in the real world as much as in the game world. Players are faced with a choice then they open the market board to buy something. If its too high, they might choose to wait till the price drops or obtain it through other means. If it's very low, they might choose to buy up the item for consumptions later. If they urgently needs an item, they'll probably be willing to pay a higher price for it. That's why people are willing to pay more than 30g to buy hard leather when they are at Limsa or Girdania, but not in Uldah.

In the game world for the most part, it doesn't cost you anything to obtain a piece of raw material. The only thing you spend is your time to gather it....so 1g is still a profit for me. As for selling under the cost for crafted items, I've also gained xp for crafting the item...so in effect, I've derived some form of benefit from crafting the item, and therefore, I'm content to sell it at a lower than cost price.

From most of your post, you seemed concern about undercutters but to me it's just a natural human behaviour. I wouldn't ask for a system change that will only have a marginal effect on undercutting. Prices are going to stabalize eventually in a few months time when the server population stabalizes. Even if the game launches with tax on listing, people are still going to be complaining about undercutters...most are just looking for an excuse to vent their dislike of undercutters and punish them for hurting their personal profitability. What range of fluctuations do you consider to be stable? What about the next person?

Many players also claims that game economy does not mimic the real world...but the fact is it does. Though with different constraints, it still obeys the same fundamental rules. Thus far I've been able to provide a link of most 'abnormal' in-game phenomena with real economics theory.

Many people in the world, especially on the internet are ignorant or misguided depending on the topic at hand. I've learned to just work with that to my advantage.

Supply and demand are the only things that are going to establish and settle the economy...

I like this.

[Zigkid3]

Zigkid3 has repeatedly said that a presale listing fee would slow the drive to equilibrium.

Yes, which is a bad thing.

Price is the biggest factor for demand. Supply does not change demand directly...but it affects the price the item is being sold at, and thus affects demand.

Well supply would change where it intersects with demand to find the new price, hasn't actually changed demand just where it intersects.

There's also this thing called price elasticity where every item has different level of sesitivity to price changes. All these applies in the real world as much as in the game world. Players are faced with a choice then they open the market board to buy something. If its too high, they might choose to wait till the price drops or obtain it through other means. If it's very low, they might choose to buy up the item for consumptions later. If they urgently needs an item, they'll probably be willing to pay a higher price for it. That's why people are willing to pay more than 30g to buy hard leather when they are at Limsa or Girdania, but not in Uldah.

I tried explaining this to Kazamoto but I think he just ignored it.
He was complaining that people undercutting each other (assuming supply and demand stay the same) would change the price even though supply/demand hasn't changed. I tried telling him that while the quantity supplied/demanded may be unchanged, that the undercutting would cause a change in the slope of the curves. Hopefully mentioning elasticity and sensitivity makes it more clear to him.

[Kazamoto]

I'm indifferent towards tax at listing or tax at selling. You think that tax at listing will eliminate undercutting...but in reality, it only serves to hide undercutting. Supply and demand drives the price, tax...only a little.

What will happen is that players will be more cautious about their pricing, and will try to sell at a price that has the highest probability of clearing the market, which means lower price...so Zigkid3 is right that it will drive the price towards equilibrium quicker.

Zigkid3 has repeatedly said that a presale listing fee would slow the drive to equilibrium.

Yes, which is a bad thing.

Please use full quotes.

Elasticity is one thing, but how much should be considered normal? 10% of an Items cost? 20%? 50%? 75%?

Items get cut to 100g from 400g, then build back to 400g, only to be cut again.

400 -> 350 ? Sure, that could just be following a market trend, but when an item loses 75% of its value, either someone is doing something wrong, or there has been a massive increase in supply.
(looking at you bite size pudding!)

[bwalker36]

Please use full quotes.

Elasticity is one thing, but how much should be considered normal? 10% of an Items cost? 20%? 50%? 75%?

Items get cut to 100g from 400g, then build back to 400g, only to be cut again.

400 -> 350 ? Sure, that could just be following a market trend, but when an item loses 75% of its value, either someone is doing something wrong, or there has been a massive increase in supply.
(looking at you bite size pudding!)

Agreed, but there is third option and that could be that it was overvalued and the market is making a correction. Demand could have pushed something really high and for some reason it lingered even as demand fell and supply stayed the same. In that scenario you could see a big correction and quickly. More times than not its just someone looking for a quick sale and the masses not realizing it and just following suit with pricing.

[Zigkid3]

Please use full quotes.

Elasticity is one thing, but how much should be considered normal? 10% of an Items cost? 20%? 50%? 75%?

Items get cut to 100g from 400g, then build back to 400g, only to be cut again.

400 -> 350 ? Sure, that could just be following a market trend, but when an item loses 75% of its value, either someone is doing something wrong, or there has been a massive increase in supply.
(looking at you bite size pudding!)

Items that experience extreme fluctuations are those with few suppliers and few transactions.

Take a look at trading goods with a ton of sellers and buyers everyday, those relatively stay within a certain range.


As for the the bit about taxes, many people on the forum here who complain about undercutters such as yourself are trying to propose a taxation for every time an item price is adjusted, as well as listed (because people would otherwise take an item down and then relist it to avoid the adjusting price tax). In that case taxes would increase. As a result prices will increase as a response in an attempt of sellers trying to pass the tax burden onto the buyers. People will also be discouraged from selling so you'll have less suppliers as well. And it will increase the dead weight loss. my posts about changes in taxation are regarding this method.

What Wazabi was talking about is whether or not the tax which is the same amount and there's no penalty on adjustments, only difference being that the 5% once it's posted vs. after sale. Assuming you could post as many things as you want on the board, he's right in that it won't really make a difference technically speaking. With this method technically nothing really happened.
However my only problem with this is that there is a limit on how many items you are selling. If by chance for some reason you can not sell the item, even if you are trying your best by undercutting or w/e and theres just too many people or people arent buying it for w/e reason because no one wants it or w/e, then it's going to take up space. Because if you try to sell more stuff but reached you 40 item selling limit, the item that is not selling is taking up valuable space to sell other stuff, if you decide to take it down to sell something else instead to make room for something more profitable then once you take it off the boards then thats 5% tax for doing nothing not even a sale.

[ShinkuTachi]

Items that experience extreme fluctuations are those with few suppliers and few transactions.

Take a look at trading goods with a ton of sellers and buyers everyday, those relatively stay within a certain range.

I'm not going to say this is completely false, because your experience on your server may differ. However, the market on Hyperion is a true yo-yo, and that statement applied to this server is false in my experience.