Guild Wars 2

I’ve been seeing much complaints on the Trading Post (TP) on the mechanics…and causes some player to not able to make money from it. I believe that stems from a lack of understanding on economics. Sure, buy low sell high, supply and demand…anyone can quote that…but how many actually understands it? I hope that this post will help improve our fellow GW2 player’s understanding on how basic economics relate to TP, and hopefully help them make some money off it.

BASICS OF GW2 ECONOMICS
The economy of GW2 is vastly different than any other MMO that you probably have played. First, it encompasses the whole game population across all the servers. This significantly improves the liquidity of the market as there are more potential buyers and sellers, and also increases the competition. When there are sufficient participants in the market, competition increases. The clearing price (the price where transaction happens) will then eventually converges to the cost of production (or vendor price). This is already happening in TP. The larger market also makes it harder (not impossible) for speculators to influence the market, which in turn benefits the general players. There are other factors at work here, which leads us to the second difference.

The second thing that GW2 differs from other MMO is that nodes and kill loots are not exclusive to only 1 player. All players can harvest the same node, and all players that contributes sufficiently to a kill will have a random chance of generating a loot drop. It is best that I illustrate this from one of my experience. In one of the event, there were 20-30 (too many to count) players defending a town. At the end of every wave, there are enough loots to fill up all my bag slots. I was fighting and salvaging gears at the same time just to clear it up…same goes to my party member, and I assume the rest of the event participants as well. Thus in GW2, the supply of gear and met drop are significantly higher than other games. What do you think will happen to the price of the gear drop? Met is a different story…crafting consumes tremendous amount of mets…that’s what keeping the met price up. Even when you are adventuring alone, the drop rate of blue and green items are crazy if you have the right buff…so in all….blue and green items are mostly trash in this game. When enough of them floods the TP, it is no suprise that the price converges to vendor price. The only reason it is 1c above vendor price is because of the price floor mechanism.

Will a higher floor price help? In pure honesty, no. All item have an intrinsic value determined by the usefulness and demand of the market. If an item is worthless…why would I want to pay a higher price for it? You may be able to sell it at the higher price…but the probability of selling it is lower. Higher price = less demand. You’ll have a smaller target group to sell to, yet the same number of people who wants to sell that item. What this would do is that some will just sell it to vendor, leaving some posting at the higher ceiling price in the TP, targeting a smaller potential buyer. It doesn’t change anything.

Another thing to keep in mind is the money supply. There is only a finite amount of money in the market at any point of time, and your REAL purchasing power is derived from how much the money supply is. If everything in the TP sells for twice as much it is now, you’ll also be buying things at twice the price….your purchasing power doesn’t change. Since the loots and gold reward appears out of thin air, most MMO will see a gradual increase in inflation. A-net put in some very good mechanism to drain money out from the system (WP, repair cost, vendor mets, listing cost, sales tax, gem sale)…it won’t stop inflation, but it will definitely slow it down.

In summary, we are playing in a very different economy designed with the benefits of players in mind, even though it is not immediately noticeable. Complaints were made because players are not familiar on how the game economic works…where in actual…nothing much really changes except for a few things in the next section.

HOW DOES THIS IMPACTS THE GAME?

CRAFTING
It is very hard to make money in crafting at the current state of the game. I believe it was the developer’s intent that crafting is used to supply gears for yourself and your friends, and maybe that shiny legendry item. I find crafting pretty easy to level in this game. It also gives out good experience, so there are a lot of incentives to craft…which means there are many people that can craft what you could. Add to the fact that TP gives you access to all the crafters in the GW2 world… just like a degree holder is a common sight in the real world, so are master crafters. It is the way it is by design.

TRADING
There is a third mechanism that is very different in this game than others, sales tax (10%). Most other game contains only a listing price (5%). This contains a sales tax as well. How this impact traders is that if you want to buy and sell to make profit from the market, the difference of your sell and buy price needs to be at least 15% to break even. If you’ve priced your sell price too high, too bad…the 5% listing price is non-refundable. Ever notice why the spread (difference of sell/buy price) is always near/at/less than 85% of the lowest selling price?

This makes speculation harder, and thus enhances the stability of the price of goods (good for non speculators) in the market. Due to the vast difference between this and other MMO, the traditional trading strategy that most players are familiar with doesn’t work very well here. Many of you are probably confident of making money in the TP equivalent in other MMO…how many of you have real experience in trading in a real stock market (and turn a consistent profit)? GW2 TP is a less complicated version of it. Due to the size of the market, it is very difficult for most players to have any influence for a significant length of time in the market. It’s 1 against 500k other players (assuming 500k box sale, don’t quote me on that).

Does this makes it impossible to make money from trading? Far from the truth. It only means you have to put in more effort. The easiest is to go through each goods and look for a wide spread, then put in a buy order, and when it fills up, sell it (hopefully the trend hasn’t change much). There was a time last week where I spotted some items that no one was placing any buy orders, and the spread of the sell price and vendor price is quite wide. I put in a large order at 1c above the vendor price. My friend thinks I’m taking a big risk…what if I can’t sell? Well…I can always sell it to the vendor and make a small lost…a small risk of losing versus a large probability of reaping a healthy profit. Other includes monitoring the price of several items daily to figure out the general price level, and then buy at the lowest price. All these involves spending time. I’m sure some other players have a better strategy, but I doubt that any will be willing to share. I know I won’t.

I hope this wall of text help improve the understanding on GW2 economics for some players.

ty
saving it so i can read at my work
<3

The problem isn’t that it’s following real-world economics models. The problem is which model it’s following.

You suggested in the OP that because there’s so many buyers and sellers (all servers on one TP) that price naturally falls to the cost of production. You admitted later on that it doesn’t.

GW2’s economy takes on the unfortunate “race to the bottom” model. I’m assuming everyone tried to beat each other’s prices until they hit 1c above Merchant price and now everyone thinks that’s just the norm. It’s not. For one, they’re probably losing money because of the listing price and sales tax. Second, there should be a convenience premium on these items, because otherwise the player would be relying on random loot drops to get that specific item that they want. Sometimes economic models produce situations where everyone loses.

Ironically, I was actually happier when the TP was down for maintenance. It brought me back to that old school MMO feel of having to wait for a PM and then negotiating a price. I love that one-on-one dynamic in the bartering context. I was also making more money. I was selling loot drops and even my own crafts for 3-5s a piece.

But it also adds in a real-world economic factor that the TP is missing – markets. You’re not going to sell a level 15 sword in Lion’s Arch. At the same time, you could probably get more value out of it to the players who are just about to move out of Queensdale as opposed those who have already moved on to Kessex Hills. It’s all about that sweet spot where how much the seller wants to get out of it meets where the buyer is willing to pay for it. Right now we’re losing a lot of profit.

Obviously MMO’s have evolved past this now-antiquated process, but I think everyone was better off when it was the only option in GW2.

Perhaps I should had clarified. Prices of things where supply>demand will eventually converge to cost price. For goods like mets where the supply and demand are constantly at flux, price does moves around a little.

People selling 1c above vendor is losing money due to ignorance or they doing it for convenience while on the field. There’s nothing wrong with that. Even if everyone is doing it in ignorance, and eventually everyone learns to sell it at a higher price…a trash loot is still a trash loot. You will probably end up at near the profit of selling directly to vendor after the transaction cost. This is not an economic model describes something…it doesn’t produce it…what you’re talking about is fiscal and monetary policy.

Take your example of TP being down. You manage to sell your loots at a higher price. That means someone is paying a higher price to buy it compare to what he could had gotten from TP. Real market adds a premium of convenience to the price of goods, nothing more. As you claim, MMO had evolved pass this. TP is just more efficient. Also, a “market” in your context is not a real-world economic factor.

If everyone is making a higher profit, you’ll also be spending more to purchase things, hence your real purchasing power doesn’t change. It’s just an illusion. Think of it as having $100 in a world where a McDonald burger cost $10, and in another world having $10 where a burger cost $1.

I think the most basic thing to realize is the difference between

“meet the highest buyer” and “match lowest seller”.

So in a nutshell from my perspective:

Never match the highest buyer if you are selling and never just buy for the lowest price but make your own offer.

Wazabi.1439:

Even if everyone is doing it in ignorance, and eventually everyone learns to sell it at a higher price…a trash loot is still a trash loot. You will probably end up at near the profit of selling directly to vendor after the transaction cost.

A good amount of the time, yes, you won’t be able to sell that blue shortbow that you looted, but that doesn’t change that I was able to sell even blue loots for a couple silver a large amount of the time.

Also, a “market” in your context is not a real-world economic factor.

Of course it is. Firms choose where to advertise and where to open locations based on where they’re most likely to extract value. There’s an economic model that explains why fast food restaurants and car dealerships almost always open across the street from eachother.

If everyone is making a higher profit, you’ll also be spending more to purchase things, hence your real purchasing power doesn’t change. It’s just an illusion. Think of it as having $100 in a world where a McDonald burger cost $10, and in another world having $10 where a burger cost $1.

This is also incorrect. Not only were crafted items selling for higher prices, fine crafting materials were conversely selling for lower prices. Crafting was profitable before the TP went up. This isn’t a case of the profit margin going down, profitability is non-existent as second tier crafting items cost a little under 2s a piece, while the finished product will typically sell for about 88c (which needs 3 of those materials, iron ore, wool scraps and spools of thread…)

Again, I think the trading post is working to the overall disadvantage of the GW2 user base. One immediate solution would be to establish a separate TP for each server. As I said, there’s just too many participants that it creates a race to the bottom, where sellers are actually selling for less than they could get from NPC merchants. Admittedly, buyers of final equipment are benefitting from this, but it also makes speculation the only other real reason to participate, and I think that’s also a bad thing.

I can see how a lot of people look at the price floor of 1c above merchant prices and has a panic attack about the economy. I do have to disagree that speculators are benefiting from this though. Speculators do best in markets with high fluctuation. Where there is little to no fluctuation there is little profit in speculation… last week price for commodity x was vendor price + 1 copper, this week price for commodity x is… vendor price + 1 copper. Unless the vendor price fluctuates, market price has not fluctuated.

I think that in general many people are making a big deal out of nothing. This game treats different parts of the MMO staples and says " why do we have to do things that way?" look at dynamic questing without needing to speak to quest givers. Many see this as something good.

I think that the intent as someone mentioned is, crafting is not intended as a road to riches, but as a rode to self sufficiency.

Think about it, every other mmo.. you can only have x number of crafting professions. The moment you want to try another… you need to forget one, to learn the new one. If you ever decide to go back to it… you have to start over. Gw2, said “That isn’t fun. Let them keep what they learned and just charge a small fee to pick up the old again.” And … many believe this is something good.

If you look at crafting as a source of wealth, you might believe that the trading post is working against you, and you might be right.

I look at it as my friend in helping me craft myself and my friends what we would like. Fact.. you can attain as drops what you might need. But drops have a randomness, maybe you don’t want + power, maybe you want + conditions… then crafted items are what you need..but… you can craft them yourselves…or buy them on the Trading post cheap. You can also sell what you are not looking for, ( + power maybe) and buy what you do want ( + conditions maybe.), and many see this as something good.

I happen to think that this is also something good. Then again, I prefer to be self sufficient, and i don’t see the trading post as a path to wealth, just a source of convenient goods I can use to …craft..for self use, and the use of friends.

The trading post is fine… it’s the speculators that need to adjust.

that doesn’t change that I was able to sell even blue loots for a couple silver a large amount of the time.

Someone is paying higher than what he could had gotten from the TP. What TP does is improves the efficiency of trade, making it easier for transactions to occur, in turn improving competition. The competition drives the price down, which in the end benefits the consumer. In a world without TP, people have to setup “stall” (to distinguish from market, the mechanism) or shouting WTS. They are being paid higher for their effort to advertise and sell their items. There’s also less of them doing it, so in a world where actual supply can meet the demand, but accessibility restricts that supply from reaching the hands of all the consumers who demand it. That reduces competition, and hence created a situation where the real supply is actually lower, driving price up. If the price is up, demand decreases, hence instead of 100 people selling it at cost price, only say 50 will be able to sell it at above cost price.

If everyone is making a higher profit, you’ll also be spending more to purchase things, hence your real purchasing power doesn’t change. It’s just an illusion. Think of it as having $100 in a world where a McDonald burger cost $10, and in another world having $10 where a burger cost $1.

Again, I think the trading post is working to the overall disadvantage of the GW2 user base. One immediate solution would be to establish a separate TP for each server. As I said, there’s just too many participants that it creates a race to the bottom, where sellers are actually selling for less than they could get from NPC merchants. Admittedly, buyers of final equipment are benefitting from this, but it also makes speculation the only other real reason to participate, and I think that’s also a bad thing.

As my point made above, without TP then many people will not be able to conveniently get what they need to craft…they will have to grind it to be self sufficient. May be that’s why you find met price cheaper…or met price is cheap simply because it’s week 1 because no one knows how much things are worth. Buyers have to pay a low price to purchase goods, that’s a good thing. Establishing a TP for each server reduces the competition, and reduces the efficiency off the market….that’s how speculators make money, on the in-efficiency of the market (even Warren Buffet admitted to it). We are all consumers at the end, so low price is benefiting everyone in the end. With a cross server TP with more people participating, efficiency increases, and harder for speculators to make money, which is also a good thing. There is this thing called expectation in economic theory. Inflation causes this variable to go haywire, that’s why in an unstable market, prices can swing very wide range. Speculators can profit by exploiting these swings, and can even create them if the market is small. This kind of market only benefits speculators at the expense of the general population. That is also why modern monetary policy targets a steady inflation rate.
I find that in your perspective, you’re assuming that everyone wants to play like you and make a profit out of the market. It is not impossible, but harder.
Lets explore this from a consumer’s perspective. Say someone has a wealth of 100c. He wants to buy a weapon and armour, which with TP, each cost 50c. He can afford both, and will probably buy it. In a world without TP, maybe both items increases to 100c. He either choose only to purchase one of them, or need to grind (work) for more money just to be able to buy it and the other. This also increases the money supply in the world (inflation), which diminishes the real purchasing power of everyone in the game world since money is created out of thin air.
Look at it with selling included. Same person, with wealth of 50c, and loots equivalent to value to 50c. He can still afford both weapon and armour if he sells his loot in market at minimum price. Now same person again, with 50c wealth, but loot now can sell at 100c, and both weapon and armour cost 100c. He’ll have to grind another 50c or get another drop to be able to purchase both weapon and armour.

@Nerelith.7360
Yes, I agree with that. I believes it stems from familiarity with an old trading mechanism. In this new mechanism, some people are finding it hard, and have to learn it all over again. I do see TP as path to wealth, but you need more knowledge and effort to make a profit out of it. It’s a big ego hit for people who were able to make money from other TP mechanism to have to re-learn to adapt to this new environment. But for any real traders or people with background in stock investment, this is just a small change of environment which they will adapt quickly.

Best advice I can think of to new players is what you’ve said earlier. Don’t expect to get rich crafting and playing the market. Be prepared to spend some time researching to be good at it.

If you make profit selling it makes it harder for the buyer to afford the gear… Anything that benefits the sellers will hurt the buyers. And vice versa. It sounds like a lot of people are upset that they can’t sell things for higher profit margins.

yes, and neglect the fact that the drops are free money to begin with, and that selling for higher means they themselves will be paying a higher price when they buy something else. They fail to see how each components of the economy interacts with each other as a whole.

I keep seeing this “5% listing fee, 10% sales tax” figure quoted. Are these numbers that ANet published or released somewhere, or is this something that a player came up with?

not sure if it is posted in official source, but it can easily be verified in TP…should be the first thing everyone does before they start to trade seriously in TP. I fell into that trap earlier not realizing the 10% sales tax…but I’ve never traded on narrow margin, so guess I didn’t make a lost. A-net should make it more visible though (not that I’m blaming them).

somewhat reassuring, cause my numbers were not replicating that. making a new post.

Wazabi.1439:

@Nerelith.7360
Yes, I agree with that. I believes it stems from familiarity with an old trading mechanism. In this new mechanism, some people are finding it hard, and have to learn it all over again. I do see TP as path to wealth, but you need more knowledge and effort to make a profit out of it. It’s a big ego hit for people who were able to make money from other TP mechanism to have to re-learn to adapt to this new environment. But for any real traders or people with background in stock investment, this is just a small change of environment which they will adapt quickly.

Best advice I can think of to new players is what you’ve said earlier. Don’t expect to get rich crafting and playing the market. Be prepared to spend some time researching to be good at it.

Wazabi, it was never my intent to say that wealth was not possible. I am sorry if you misunderstood. What I meant was that it seems to me that while it is possible for people with more knowledge and experience, that are willing to put in the work to make a fortune just playing the market , it is harder.

There is no instant " Buy mats from market, combine, add 20 % profit margin, sell to willing buyers." in gw2. Part of it may be that since it IS a new game. As you said, we do not yet know what a sword of sheer awesomness at demonslaying + 50 is really worth.

We do know what the market this moment says it’s value is… take what a merchant pays for it.. + 1 copper. lol… I believe that if anyone is going to actually make money at the market they need to see what it is people need, and trade in those items. not in what sells a Lot of. 20,000,000 selling that aesome green will be selling for less than 1 person selling a much saught after blue for example.

While things do have an innate worth, that worth has more to do with supply and demand than it has to do with the cost of production. Some items can cost copper to make and sell for silver… others vice versa.

PS. You keep saying mets… what are mets? the only Mets i know play in a babeball park in Queens. :-)

@Nerelith.7360
LOL…I think there’s some confusion. I totally agree on your view on making money in this game. The mechanism makes it harder, but it is still possible. That’s what I’m trying to say. Shows that I’m not very good at expressing myself with words.

Mets =crafting materials…probably should spell it mats…my bad

Kaloi.9716:

I keep seeing this “5% listing fee, 10% sales tax” figure quoted. Are these numbers that ANet published or released somewhere, or is this something that a player came up with?

According to their wiki, yes.

http://wiki.guildwars2.com/wiki/Marketplace

Ok, i read the OP. Very good wrap up of the GW2 economy, you seem to know youre stuff. I didnt read all the other replies because, lets face it, the OP already took me too long to read as it is.

One user posted:

“I think the most basic thing to realize is the difference between
“meet the highest buyer” and “match lowest seller”.
So in a nutshell from my perspective:
Never match the highest buyer if you are selling and never just buy for the lowest price but make your own offer.”

I dont think this is realistic. As a buyer, i definitely want to get whatever it is i want to buy at the LOWEST price, no matter what. There’s no benefit in buying higher…you’re not going to make a dent in the market if you do. It’s only normal that you’d want to spend the least to buy something, like IRL.

Here’s what i think should be changed about the TP…it’s just my opinion, i’m not an economist like some here, but i think it could help with the issue that everyone seems to match the lowest seller (keeping prices low) and also matching the highest buyer (who usually is buying considerably lower than the lowest seller) and therefore putting all the power in the hands of the buyer. Here’s my suggestion:

-Don’t show sellers what price others are selling your given item at. That will not allow the next seller in line to sell one C lower than the last guy, etc, etc…until the price reaches Vendor price, at which point there is definite loss in profit.

-Don’t show buyers the prices that different sellers are selling at. They will automatically buy at the lowest price (who would say: "Nah, im gonna give that players 2S for that Claw instead of giving that player 1S), thus pushing sellers to meet that lowest seller, thus lowering prices. The power is in their hands this way.

-DO show buyers how many of their item they want are being sold, and by how many sellers (valuable data). DO show sellers how many buyers want their item, and how many orders there are.

-DO show sellers and buyers some sort of “guide price” for that particular item they’re selling/buying. This guide price would be the average price that the item is selling for. Players can then make their own custom selling offer (can be higher or lower than the guide price) and buyers can also make their own custom offers to buy an item (again, can be higher or lower than guide price).

This approach gives the market a level of flexibility. The price of any given item can rise or fall, depending on demand and supply, rather than putting much of the power in the buyer’s hand by simply choosing the cheapest price available.

That way, the price of an item will be determined roughly by what it sells at on average, and not by the best deal you can find. The reason why many items dropped to Vendor’s price is simply because everyone lowers their selling price based on the lowest seller’s price, in order not to have their item sit on the TP to the point where the price drops so far down that they can’t sell it (while also losing their listing fee).

Again, i’m not an economist and i could be wrong, just a suggestion.

Mario Lemieux.9107:

(…)

One user posted:

“I think the most basic thing to realize is the difference between
“meet the highest buyer” and “match lowest seller”.
So in a nutshell from my perspective:
Never match the highest buyer if you are selling and never just buy for the lowest price but make your own offer.”

I dont think this is realistic. As a buyer, i definitely want to get whatever it is i want to buy at the LOWEST price, no matter what. There’s no benefit in buying higher…you’re not going to make a dent in the market if you do. It’s only normal that you’d want to spend the least to buy something, like IRL.

(…)

I’m talking about the, let me call it “quick-sell” or “quick-buy” option. You would not believe how many people are selling their goods at 1c over vendor price because there is the “meet highest buyer” option in place.
I enter a buy order (at 1c over) and the goods just come in. Then I turn around and sell it higher – the people wanting this item “now” then buy it from me.

Not realizing if they
a) put it up for a higher price when selling they will get more money for it (thus far stuff moves rather quickly as well)
b) they can just put their own offer in if they want to buy something and don’t have to pay the higher price.

So – to what you mention up there – you want the lowest price when you are buying – correct – now don’t just buy it from what is offered – make your own offer.

I made the same mistake in the beginning, blissfully unaware selling my good out of my pocket – I did not get the best price for them.

Yesterday I needed jute scrap – I did not just buy it, I made my own offer and not even half an hour later my order was filled – for a better price.

Sorry if that wasn’t clear.

Edit: Once everyone understands this, prices will normalize for the most part. At least that’s what I believe.

Rouven.7409:

So – to what you mention up there – you want the lowest price when you are buying – correct – now don’t just buy it from what is offered – make your own offer.

I made the same mistake in the beginning, blissfully unaware selling my good out of my pocket – I did not get the best price for them.

Yesterday I needed jute scrap – I did not just buy it, I made my own offer and not even half an hour later my order was filled – for a better price.

Sorry if that wasn’t clear.

Edit: Once everyone understands this, prices will normalize for the most part. At least that’s what I believe.

I totally agree with that. Buyers should definitely put their own offer in, they have nothing to lose….if they don’t get it for their price, then big deal, they take their money back. Sellers, on the other hand, have everything to lose…5% listing fee is gone if they don’t end up selling. This can happen more than once if they take their listing off and re-list for a lower price.

I guess what i’m trying to say is that it’s a buyers market, that’s what it seems for the most part. When it comes to sought-after crafting materials, that seems to disappear. It stabilizes. But other than that, the buyers have the power. They get to choose from a list of prices, and they’ll just pick the lowest one.

The sellers, on the other hand, just get to see what the highest buyer is currently offering, and if they don’t opt with that, they will either match the lowest seller, or take a chance in pricing their item higher than the lowest seller…and when they do take that chance, their listing becomes an afterthought for buyers.

Unless the price of the item is rapidly increasing (which for the most part is not happening right now) I don’t see the balance here.

Another x-factor to properly understanding the market which can tend to be overlooked in GW2 is the alternative currency purchasing power and the opportunity cost of acquiring gear. Most complaints I see from the average player revolve around the inflated material costs and the inability to profit from crafting. Keep in mind, though, that if you play all parts of the game you are acquiring comparable gear for your character through means other than the crafting & loot items that populate the TP. You can get new gear from dungeon tokens, karma points and WvW badges – all of which can be the same or similar to what you’re making with crafting. Naturally, the “supply” of gear-realated items is increased even beyond what you see in the TP.

Because of this fact, most of the traders profiting from the TP are identifying the more profitable items that cannot be purchased with alternative currency, like crafting materials and non-gear-related crafted items like dyes, food, runes & sigils. Rather than be annoyed that you are not making money from crafting, identify potential markets for the items you are gathering/crafting that ARE making money and exploit that instead. You as a player just need to decide whether increasing your wallet or your crafting skills are worth more to you in terms of how you spend your time in-game. Especially given that the size of the market just keeps increasing (congrats Anet on 2 mil game sales), it will be even more difficult to try to make a profit without a little research, math & knowledge of trading mechanics & trends.

Any market with sufficient competition will be a buyer’s market. We call it Price Taker in economics. Personally, I never use the “quick sell” “quick buy” button. I browse the selling and buying price and volume before I make my decision.

Many isn’t aware of the sales tax, so you may be losing money just by pressing quick buy and quick sell if you do not keep an account of your investment profits.

Changes in displayed information won’t change the fundamentals of supply/demand…but omission of information or inclusion of easily manipulated/meaningless information (like average price) could give rise to speculation and manipulating the market for profit because amateurs will rely on that (much like how they rely on quick sell/buy), but pros will be able to extract the omitted info for an advantage, or manipulate meaningless info to trick the amateurs.

@Mario Lemieux.9107
Didn’t saw your post earlier. Thanks for the appreciation. Reason I’m doing this is that I see this as a system that benefits the player population as a whole. I’m fortunate to be educated in economics&investments to understand the significance and logic behind it, and thought that it would benefit the players to share it seeing that too many have an incorrect/misguided view on the whole thing.

I can understand the concern that many players have on TP…but those concern only stems from the benefit of an individual looking only at isolated component of the market without considering how they interact interact with other components and the benefit of the population as a whole. I do not expect to change the view of stubborn believers in their own theory build without any fundamental understanding of how an economy works…but it is more for players like you who comes in with an open mind admitting that there are things that you’re good at, and there are things you’re not.

All these economics hurts my brain. All I know is that I find blue mats, and sell them at the recommended price. It’s way over the vendor price, which is good for me. I can sell Vials of Weak Blood, or Copper ore, or other neat things, and I wind up making a ton of money for it. It’s very convenient. I hope this isn’t bad for the economy.

no its not. You can’t blame someone for selling something that you want to buy at a high price much like you can’t blame someone for selling something you want to sell at low price.

My biggest problem with the trading post is that items stay up indifinetly. There should be a max limit of 1-3 days. Otherwise the TP is going to become clogged, and the economy very very stale, to the point that you won’t be able to sell anything at all, and if you do, only for a few copper. it will also allow the market to competitive and it will find a natural equilibrium price for items. otherwise it’ll be clogged with undercutters who don’t care about prices at all and just want to get rid of stuff. As such, everyone in the economy will have every reason to buy, but no reason to sell.

Putting a time constrain will remove clutter…but won’t magically makes you sell for higher price. Trash item is still worth trash value. You can post it at a higher value, but will anyone actually buys it? The +1c price for trash item is at equilibrium…cost price +1. The cost price here being vendor price. That’s the equilibrium for a perfectly competitive market.

If everyone only wants to buy and no one wants to sell, what do you think will happen to the price? Price will go up again. What you’re seeing for trash items is the opposite…everyone has every reason to sell it but not to buy it.

Wazabi.1439:

Putting a time constrain will remove clutter…but won’t magically makes you sell for higher price. Trash item is still worth trash value. You can post it at a higher value, but will anyone actually buys it? The +1c price for trash item is at equilibrium…cost price +1. The cost price here being vendor price. That’s the equilibrium for a perfectly competitive market.

If everyone only wants to buy and no one wants to sell, what do you think will happen to the price? Price will go up again. What you’re seeing for trash items is the opposite…everyone has every reason to sell it but not to buy it.

true, the change in demand (people buying more) would raise the price. however, since it’s saturated with excess supplies, that same amount of supplies still exists within the market, unless that person is actually planning on using that said item for a real purpose. otherwise if they’re going to be trying to resell it, so will everyone else. that price will be stuck at an artificial equilibrium because that supply still exists, even if people buy it.

and no, im not advocating you try to play the market. i’m saying the price just won’t go up to a natural equilibrium cause its stuck at an artificial one from the clutter, unless a mass surge of people actually need that item for a true purpose.

it may waver though, but only at a low point, still lower than it would if items were kept more current and had an expiration date so they arent forgotten.

edit: as the clutter is cleared out, it would keep the economy at a current, more controlled, natural state.

the supply is determined by how many trash the game spawns from loot. It can stay in a person’s bank, pack, or cluttering the TP. If a person is not using it or destroying it, then it is available to be sold, hence available as a supply. Removing the clutter shifts this item back to a person’s pack/bank, and remove it’s visibility from the market, but it doesn’t removes it from the supply pool.

I can see where you’re coming from. More people will sell trash to vendor so less supply in the market right? So price should go up? But what if the demand for such item is so low that even if the supply is being taken out of the market supply there is still excess supply? Trash loot are so easily obtained that’s why there’s little to no demand to it. This is an artificial equilibrium because of vendor price…if there aren’t any vendor for you to sell to and no price floor, then these item will sell at the value of mats you can salvage from.

In sum, you’re arguing that the equilibrium price for trash gear is above vendor +1c, while I’m saying that equilibrium is at lowest possible price depending on mechanism. You sounded like you have some knowledge in economics, so you should have a textbook around somewhere. Flip open the chapter on perfect competition, that should provide a more comprehensive explanation on my arguments.

You need to consider both the supply side and the demand side to determine the price. Our economy for trash loot is pretty much at a natural state now.

But what if the demand for such item is so low that even if the supply is being taken out of the market supply there is still excess supply?

And that there is the problem, since everything clutters. If people attempted to bought up item X in hopes the price would increase, it will never happen unless a ton of people with buying power banded together and tried to monopolize. otherwise, trying by yourself will do nothing, since there is so much supply.

And thank you for the compliment I actually have read quite a few for micro and macro for some college classes, took AP econ and got a 4 on the AP exam, i’m now working on managerial economics.

I’m on Master’s of economics. Nice to see a fellow economist.

That’s exactly the beauty of perfect competition in a large market like TP…for things where there’s an excess amount of supply, there’s no room for speculative profits. This market is designed so that it is hard for even a group of people to corner the market/move the market. They can move it, but the duration will be very short until the market corrects itself to the natural value at that point of time (that value is in a flux). I’m all in for speculating…that’s what I do in every MMO….I can tell you this one, you’ll need to do your homework. Do it on items where demand > supply. It’s easier to make speculative profits on those.