Guild Wars 2

Right now, buyers do not have an incentive to increase their prices in competition with one another. Instead, the system encourages an oligarchical style of price fixing. I can see two reasons for this.

1. Efficiencies are identical for all market participants

Normally, market participants have varying specialties. With the current crafting system, however, all participants are effectively identical in their specialty because they all rely on universally available crafting mechanics. That means that where in real life a market participant could force another out of the market through more efficient production or higher quality, market participants here have no way of improving their output, differentiating themselves from one another, or improving efficiency to afford higher offers. This means that raising one’s prices is not going to deter competitors because their profit margins are identical to yours, and anything you can afford, they can afford as well.

2. Buy Orders are Time Consuming
Placing tens or hundreds of buy orders is very time consuming. For high-volume traders, maintaining buy orders is the primary limiting factor. Simply refreshing one’s buy orders over and over again is the most reliable way to increase one’s rate of filled buy orders, and not increasing one’s offered price as it would be in a real-world economy.

These two factors combined means that informed market participants compete in terms of who can refresh their buy orders often enough, not who can buy at the highest price. Furthermore, because the efficiencies of each individual are identical, informed participants do not raise the price any more than is absolutely necessary. They know that they cannot force competitors out of the market, so any more than the minimum increase will do nothing to help them sell faster, and will lower their profits in the future. This leads to naturally low buy order prices which take a long time to reach market equilibrium, and whose prices often reset back down when the price goes too high to remain profitable, and the last participant resets their buy order.

I don’t know whether this problem will fix itself in the future, but I think it’s definitely worth investigation.

1. Efficiencies are identical for all market participants

Normally, market participants have varying specialties. With the current crafting system, however, all participants are effectively identical in their specialty because they all rely on universally available crafting mechanics. That means that where in real life a market participant could force another out of the market through more efficient production or higher quality, market participants here have no way of improving their output, differentiating themselves from one another, or improving efficiency to afford higher offers. This means that raising one’s prices is not going to deter competitors because their profit margins are identical to yours, and anything you can afford, they can afford as well.

That’s unsolvable in GW2.
In EvE, that is solved by trade skills, refinement skills and production skills. Not quality, but craft base cost, production time and tax reduction.

Strill.2591:

2. Buy Orders are Time Consuming
Placing tens or hundreds of buy orders is very time consuming. For high-volume traders, maintaining buy orders is the primary limiting factor. Simply refreshing one’s buy orders over and over again is the most reliable way to increase one’s rate of filled buy orders, and not increasing one’s offered price as it would be in a real-world economy.

Very true, moving to a First in First out system would fix most if not all of the problems on the TP currently. I believe ANET is working on this.