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7-18-2007 @ 6:30PM
mmm I love MMO economics. The truth is it's basic economic theory and the behaviour coming from the everything for 2g sales or the undercut everyone on gems is hardly anything Blizzard needs to deal with. On the everything for 2g in some cases it may be right to buy and list them at a higher price in some cases it'll be the wrong move. Sure a lvl 70 with extra gold probably won't care 1.5g or 2g (it's still in an area where marginal benefit > marginal cost to them). To a low level though yeah I see why they'd be upset however in wow there's no monopoly on production (aka you can kill the mob that drops an item yourself or get from someone not going through the ah) so it isn't really a problem. The greater truth from the perspective of a low level is that all it's really doing is causing inflation and while relative money drops off mobs aren't increasing so aren't the things they're spending money on (skills, repairs, etc). If anything it's giving them an opportunity to be rolling in cash by listing the item for 1.9g on stuff that should normally sell for say .5g and selling to either Mr. 2g or to the next level 70 who comes along and needs it. From the 2g seller's perspective the behaviour will last on items where it's worth it for the guy to re-sell at 2g (aka equilibrium based on supply and demand is closer to being reached), but when the market really needs it to be sold for less then he's just wasting his money and odds are he's going to figure this out eventually. For the JC undercutting everyone no one practises predatory pricing period not even Walmart as much as people dislike it (they practise cost cutting in every way shape and form, but not predatory pricing). You don't sell below cost and lose money on the hopes that you'll get rid of all competition and be able to act like a monopoly and capture consumer surplus. It doesn't work in the real world and it sure won't work in a fictional world where there's low barriers to entry into the industry (especially since most of his competition would just stop selling for awhile let him list his stuff higher and undercut him). Just reading the linked thread now all the guy is doing is selling gems for a lower price which is either being stupid or just seeing a new equilibrium develop. There's no way he's losing money on the sales since if he was he'd be out of money eventually and no one would have reason to complain so again it's just a balancing equilibrium between supply and demand. If you can't sell your gems for the price you list it's simply because your price exceeds the equilibrium price. The mechanic is working the way it is right now because everyone has ignored the actual market. In this case seriously someone please go read up on perfect competition and what economic profit is in that situation. Obviously we're not in 'perfect' competition because there are some barriers to entry, but we're pretty close seeing as there are probably a lot of JCs who can do exactly the same work he does in exactly the same manner if they wanted to. Oh and please don't tell me about, but people do take losses and sell stuff for less than mats (thus predatory pricing). An obvious example in my mind would be engineers selling khorium scopes, but it's not really predatory pricing because there's a utility attributed to skilling the prof up which if it didn't exceed the utility of the monetary loss the item would never get crafted.
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