Guild Wars 2

If you undercut the lowest seller-price of the day, by X%, your listing fee is reduced.

Thoughts?
*Changes are noted with italics

The reason for this idea is two-fold.
1) Inflation is inevitable in an MMO. While gold-sinks are great, something to directly encourage lower prices would be nice too.
2) Players are always undercutting by a few copper. There should be an incentive to reduce it by an amount that is less aggravating to your fellow merchants.

First off, you don’t mean inflation. Inflation is expansion of the money supply, and listing fees are an important mechanism reducing the money supply… so your suggestion would actually increase inflation. But again, I know that’s not what you meant.

I honestly don’t see how your solution would fix the “problem” or even what problem you’re trying to fix. Undercutting happens… all the time. I don’t see how more could occur, even with that rather minimal change to transaction costs. If anything, prices might increase slightly, due to a faster expanding money supply.

I see what you mean, encourage people to sell for lower prices by giving them incentives to do so.

But there is a problem:

Joe posts an item for 100g but pays 5g posting fee. If it sells, he will get 90g because the TP takes 10%. Joe nets 85g profit.

John undercuts and sells at 99g and in doing so his posting is free. If it sells, he will get 89.1g. John nets 89.1g.

As you can see, it actually more profitable to undercut.

I like the idea but it would need adjusting, not so much as free but reduced fee maybe.

There’s already an incentive to undercut the lowest seller: your item sells more quickly.

What you’re proposing does nothing except encourage excessive and ruthless undercutting to lower the price of goods, but you do realize this will eventually result in a new equilibrium with either less supply provided and a shortage which forces back up prices. Inflation’s biggest counter are gold sinks to decrease the ever growing money supply such as TP listing fees & taxes, as well as waypoint and repair costs.

Economics isn’t as simple as make things cheaper, everyone be happy. Asurans have it quite right, “There is no profit in the eternal alchemy.”

defrule.7236:

As you can see, it actually more profitable to undercut.

I like the idea but it would need adjusting, not so much as free but reduced fee maybe.

That was kind of the intent.
The key point here being that there is a fixed value for players to aim at, so players stop undercutting for 1 copper and undercut in more appealing amounts.

Having thought about it some more, I think the better guideline would be a % lower then the current lowest seller price, so the number scales well.

Illconceived Was Na.9781:

There’s already an incentive to undercut the lowest seller: your item sells more quickly.

But that incentive still comes at the hefty Trading Post fee, which encourages some players to match highest-seller or price higher because they’re patient people.

• There also exists merchants who make it a personal goal to buy in bulk and raise the prices for basic ‘buy low, sell high’ profit.

And currently, people only undercut by small margins, which are easily offset (even overwhelmed) by the coin-generation from coin-farmers and all the trash-loot being sold to vendors.

Highly.8347:

What you’re proposing does nothing except encourage excessive and ruthless undercutting to lower the price of goods, but you do realize this will eventually result in a new equilibrium with either less supply provided and a shortage which forces back up prices.

Except you seem to be turning a blind eye to two major factors.

1. “Ruthless undercutting” already takes place. At least with a more fixed incentive, people would aim for more then 1 measly copper

2. This is a game where a “shortage” is not possible.
We’re in a game where supply is technically infinite remember? The only reasons for prices to go up is because of coin-supply-increase and rarity. Neither of which can lessen from prices going down.

As time goes on in this game, almost all items will go down as the supply will continue to increase, but the demand will decrease (for instance, “Abyss Dye” will eventually get lower and lower in price as less and less people want it, but the supply will continue to increase).

That being said, you want to expedite the price drops of items, and I don’t see how this would help the economy in any way. I fail to see how this would help the economy of the game, it would actually expedite the fallout of the economy.

DreamOfACure.4382:

The key point here being that there is a fixed value for players to aim at, so players stop undercutting for 1 copper and undercut in more appealing amounts.

Undercutting by 1 copper is a legitimate tactic. There is nothing wrong with it. I don’t see any reasoning above that explains why we should pay people to sell at certain prices.

Again, there is already an incentive to undercut for “more appealing amounts” — you sell your stuff more quickly.