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10-28-2010 @ 8:00PM
This would correctly be modeled in game theory as an n-firm Cournot competition game. Profit from the model for a given player i is (a - qi - q~i)((a-c)/(n+1)) - c((a-c)/(n+1)), where a is a fixed demand parameter, c is marginal cost, n is the number of firms, assuming symmetric costs and demand. You can see that profit goes to zero as n goes to infinity (keeping in mind that cost includes opportunity cost).That's what Basil misses in his analysis. The magician metaphor is not a good description of why some auctioneers don't like gold guides widely available. It's rather that auctioneers know (even just intuitively) that as the number of players on the AH increases (n in the model above), their profits go down. The best example of this is when mmo-champion.com posted their gold addons guide, profit in the industries mentioned in the guide decreased by approximately 30-50%.Basil writes, "More to the point, the more auctioneers there are, the more fun we all have." That is most certainly not the opinion of everyone in the market. And finally, it is not that Basil is providing secrets, but rather he is just popularizing already well-documented concepts. He's not adding anything new, but just voicing it on a larger audience website. Nonetheless, popularization such as this affects the profit of AH players, and so it should be taken as unexpected that AH players might not like this sort of column.
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