While I agree that it is monopolistic, the simpler answer is this is a player driven economy. Case in point one of my alts has 380 jewel crafting. I don't like going out and mining adamantite ore because it takes too long on my regular flying mount (e.g. 35-45 minutes to complete one harvesting circuit in Netherstorm). So instead I purchase the ore from the AH. In the beginning a stack of adamantite ore went for 20g. I've seen this average slowly increase it over a few weeks to 27g. I have really have no control over this. Blizzard also doesn't have any control over that as well. Oh I'm sure they could come in and "patch" stuff, but the fact is they let players dictate the market... as it should be.

Please go study your economics. Blizzard manages supply, not demand. The only prices they set are at the vendors.

Auction House buyouts are are set by the person auctioning an item. Some people manipulate the AH market by posting outrageous prices, such ash 75G for a stack of wool, to manipulate the average price for an item as calculated by programs like Auctioneer; they know this works because people are letting the mod think for them - an item is expensive if acutioneer says so.

Similarly, people manipulate supply by buying all of an item and jack up the buyout or limiting supply.

But there is an easy solution - don't buy the stuff!!!

actually, by the mere fact they set what items are required for combines in tradeskills show they can control demand. Do you not recall the patch where Khorium was added to quite a lot of recipes? Price before and price after was a big change, because the demand was now there since Blizzard implemented it as such.

Yes, I should go back and study economics so I can find this fabled "player driven economy" you speak of. Go back to your cage troll, and can someone please bring my original post back from the grave?

Whats sad is that I even noted that people would get lost in the idea that players set demand because of the ability to set a price. Yet, here we are with my comment voted down, because a couple trolls DON'T HAVE A CLUE ABOUT ECONOMICS.

WARNING: EDUCATIONAL CONTENT ALERT

After reading three pages of economic misconceptions, half understandings, and total economic noobism, I’ve decided to boil things down into a more understandable view of economics within WoW.

First of all, everyone so far is pretty much half right and half wrong. The WoW economy is NOT a free market, so those said that can have a gold star on their forehead. WoW is also NOT a Monopoly, so those who said that may also have a gold star.

What is an Economy?
This is the whole pie right here. An economy is simply the system of activities that relates to how goods and services are created, transferred and consumed within defined set of boundaries. The boundaries as relates to our real life experiences are typically geographical and are associated with a particular country. There are also political boundaries, such as the European Union, which geographically, covers many countries. And don’t forget the ever omnipresent Global Economy.

What is a Market?
In strictly economic terms a market is a social structure in which entities (individuals or groups) exchange rights or ownership of goods, ideas and services. If an economy is a system of activities, then the markets are The Activities. In real life we have many markets that we are familiar with. We have very big markets such as the Stock Market, and we have very small markets such as the local Flea-Market. Both have a similar goal, the exchange of goods, services and currency. Both go about it in very different ways, have very different products, and both are part of the same economy.

No Free Lunch, No Free Market?
Simply put it is a market free of any sort of regulation, tax, or interference from any outside entity. Transactions are arranged and agreed upon by the parties involved, and are self regulated. The only free markets in existence are single transactions between a buyer and a seller where neither is misleading or coercive, and no third party is involved. So, as a social structure in the practical economic sense, these only exist theoretically.

Economic Identification, or What’s What?
Well, there are two main schools in Economics, Capitalism and Socialism. Capitalism can be loosely defined as Private Ownership. Socialism is far more difficult to sum up because even socialists tend to disagree as to what they mean by Socialism. For simplicity sake, lets just lean towards State Control of Industry, Production and Distribution of goods and services. Yes, I know the waters are quite muddy here so feel free to flame away.

Reality Light:
In reality most, if not all, economies are considered Mixed Economies. A little of this, a little of that.

WoW, Econ 101 – AKA: WoW That’s Complicated!
Lets start by saying that there is a Global Economy in WoW that umbrella’s all aspects of the in game economics system. The currency of the global economy is, for all intents and purposes, defined as “loot.” It is upon the foundation and backbone of Loot that all other aspects of the games economic health is built. Loot is anything that you can harvest for personal gain, such as money, Badges, Marks, and other drops from NPC kills or chests, or items gained from skilled gathering crafts such as fishing, mining ore and picking herbs. Loot also includes honor points and arena points, because these too can be used as currency to purchase goods and services.

There are two main markets within WoW. First is the vendor, or PVE market. The currency for this market is usually considered “Gold,” but you may also use spirit shards, or Apex shards, and Honor Hold marks, and Honor Points and Arena Points, etc. There are may sub-markets within the PVE market. I say PVE because you are a player purchasing something from an environment vendor. This would be a socialist aspect of the game. Prices are set and basically can’t be negotiated with. You can’t demand better products or customer service. The “state” has set, and locked the bar in place.

The PVP is mostly tied up in the AH, but there is a lively bartering economy as well. The prices are set by the seller and will either be met or rejected by the buyer. If people jump to buy a product faster than it can be prepared for sale, then the price will rise until people stop buying. If nobody buys, the price will drop till they do. This is a very capitalistic school on economics of course.

The fun of the economy is that there are aspects of the economy in WoW that are both faction exclusive AND inclusive at the same time. The AH in Gad in relation to the AH in the main cities, for instance, gives an example of one instance where a tool is faction specific on the one hand, but is inclusive on the other. There are also PVE vendors that only cater to one side or the other, others that cater to players based on Rep, or other factors. It really is a fascinating web of connections.

A note on Blizz being a Monopoly because they the rates in which “loot” is introduced into the economy: This is the natural way of things! In WoW, as in real life, there is not an infinite supply of raw product. There are a limited number of gold veins on Earth, just as there are a limited number of Fel Iron veins in Outland. There are only so many barrels of oil buried on earth, just as there are limited numbers of Prismatic Shards. Over time as society grows, technology grows with it and it becomes easier to gain access to natural resources. The same applies in WoW. As we all get ready to push towards 80, there doesn’t need to be such a struggle to get the most useful economic fuels because we will soon outgrow them. Large Prismatics will go the way of the buggy whip and the Large Brilliant shard. If Blizzard sets artificial drop rates on the in game loot, it isn’t anything nefarious… it is simply the natural course of economics for as long as man has traded goods and services. There is never an infinite supply of anything of great value. Historically man has used gold and gems as currency in one fashion or another. Mostly they are purely decorative and useless… but rare and difficult to get possession of. That gives it value. On the other hand, leaves are very useful. They scrub the air we breath and help us to keep alive from day to day. By far, they are a much better product in terms of value and usefulness in their natural state. They would be useless as a form of currency though due to their abundance and the fact that they literally grow on trees. If Blizzard nerfs or buffs the value of an item, there is nothing insidious going on. It is the most natural thing in the world, and quite important to maintaining a healthy and vibrant economy… virtual or otherwise.

If you made it this far you really need to find something better to do with your day. (I already know I need something better to do with mine.)