Market ideas, and how to fix it.

[Zigkid3]

The idea is to force you to relist an item

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

[Wazabi]

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.

[Kazamoto]

^
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.

[Xystic]

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

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

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

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.

[ApolloGenX]

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.

[Wazabi]

^
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...

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.

[Tommara]

#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.

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.

[ApolloGenX]

^^^This!

/10char

[Zigkid3]

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.

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

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.

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.

[ApolloGenX]

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.