In Praise of the FFXI Auction HouseFollow

Greetings. Sorry I didn't respond to your "rebuttal" sooner. I moved and just got internet back.

Here is the problem you have Almalieque. Your basic premise is fallacious. Let me write it in big letters so that you understand.

Your proposed change DOES NOTHING to CREATE or ADD competition. There would be no net gain in sellers, no net gain in buyers. There would be no more product being sold.

In addition, the assumptions you make are flawed. Take for instance your comments on balance. Balance is never the end goal of a market because there are always new players entering and old players exiting the market. "Balance" is only for studying hypothetical economies where only one or maybe two controlled points of the economy is changed to view the effect on the balance. Attempting to force balance on the system is a foolish and impossible venture.

Regardless, you keep acting like everyone is responsible for proving that the current system is perfect. Sorry, that isn't how it works. You have to prove that your proposal will make it better. Here's a hint: you haven't.

You keep using these words, I do not think they mean what you think they mean.



Um.... see my above post. Another seller entering the market is precisely the definition of competition.

Oddwaffle has already given you an example. Your proposal creates a stagnant market where prices don't change. A market that invites collusion from a small group of sellers controls what the price will be.

actually, oddwaffle was fairly explicit. Your proposal removes the benefit of underselling a product. People will continue to underbid, but many more sellers will no longer undersell due to the forced nature of determining that for x senario (bid of exact listing price) y product sells first (product listed at x value instead of lowest listed value). People will continue to underbid, I have never even tried to say that they wouldn't. The problem comes from the sellers side as sellers realize that within a certain margin, there is almost no benefit to undercutting product on the market. Eventually, sellers will stop undercutting at all, then it won't matter how much buyers underbid, because they will never find product at anything other than the listed price.

Then what happens is a few sellers get together and buy out or force out those that still try to undercut the going rate. Once that is done, this oligarchy will then proceed to raise the going rate at a rate they think the market can sustain and eventually the product is selling for vastly inflated prices. That is the problem with your proposal. Sellers can continue to bid 900, but there won't be any RCB under 2000.



Increasing or decreasing supply does not have any effect on demand what-so-ever. It does however, which you seem to be resisting quite strongly, have an effect on price. Namely, increasing supply will trend price down, where decreasing supply will trend price up. New sellers entering the market definitely and (what should be) indisputably should have a downward driving force on the price of goods in the market. That is where competition comes from. It isn't artificially created.

Going back to your proposal, this was what oddwaffle was trying to tell you. If 10 new sellers of RCB enter the market with a significant quantity of buns, it would follow that the price of RCB would lower. Not because demand has changed, but because there are just simply more RCB on the market. Your proposal would do much to stop this logical reduction in the price. So supply will stay high as the price stays fairly static. Eventually what will happen is the supply of RCB on the market will continue to grow as the same quantity are continued to be bought as the damand dictates and then there are so many RCB on the market that everyone starts getting them back.

Without your rule, the 10 new sellers enter the market and start selling their RCB for 500 gil. The first few will be sold at the same 1000 gil, but the price will start to drop as people realize that there are more RCB on the market. Because the price listed is allowed to remain fluid like this, eventually what will happen is those 10 sellers will sell all their stuff and either make more, or leave the market when they are done. Regardless, if more sellers remain in the market, what you could see is eventually RCBs are selling for 700 gil instead of 1000 as demand would eventually shift with lower prices. Sellers leave, price would stabilize at 800 gil, More buyers, 500 gil. This is what I was trying to say about balance above. It is ever unachievable because balance is constantly shifting in the economy.

Regardless, after all this, I realize that you don't necessarily have a problem with the AH per-se. Your problem with the system is that you don't think it is fair that someone can list an item at 500 gil and get 1000 gil out of it. Well I'll just have to say tough on that one, because it is a blind bid system. That is how it works. If that is not acceptable to you, I suggest you start bazaaring more often to stave of your rage at the perceived injustice of the system.

Sorry I didn't make my example clearer. Let's revisit it with 1000g RCB, 1 old seller and a new seller wanting to enter the market. Lets assume the market will buy 7 RCB per 2 days so only 1 seller can sell his 7-slot AH every 2 days. If anyone put more than 7 RCB at 1000g then some of them will get returned.

With the current AH system, the new seller set a lower price than 1000g so he can sell faster. It's an even better incentive to sell lower if he can sell 1st AND get paid higher than he wanted. It's obvious that he is not going to set it to 1gil as he will lose money so he will set it somewhere higher than his material costs and worth his time spending making the RCB. The old seller will find out about this problem once his items get returned and wil set his price lower to match or exceed the new seller. The price will be adjusted once a buyer found out that there is someone selling lower than the 1000g point. More people will buy RCB and it will sell for more than 7 every 2 days. A 3rd player might even enter the market at the lower price too as long as he sees there is profit to be made. Eventually, the market clears when nobody wants to enter the market and the price is lowered to the point where people will make no economic profit (yes, it's a good thing and no they are not losing money, look up economic costs if you don't know what I am talking about).

With your proposal the situation will be different. Your systems put more power on the one putting the item 1st, not the one selling at lower price. The new seller will not be putting his goods for less than 1000g. Why should he put it any less? Since he knows he won't be selling faster than the 1000g guy. The only thing he can bet on is there is a chance that someone 'might' try to buy at a lower price AND people actually check the part where the price is lowered. This means the condition required for the price to be lower will be a seller willing to put a lower price, might not sell faster and suffering from lower profits compare to the current AH system. There is also a good chance that most of the new items will no be sold even at a lower price because the old seller is monopolizing the market. You can clearly see this by expanding the example. If the new seller put his goods on the 2nd day then he will not sell anything until after the old seller goods are sold. That means the new seller will pretty much waste 1 day sitting on his goods. Half of his items will get returned while the old seller will notice this once his items get returned after then 4th day. Both players will be frustrated and neither can do much if the buyers refuses to try and bid a lower price. This makes it extremely hard for new sellers to enter a market and force prices to go down.



Um... you really REALLY need to take a course in economics. You either gave me a very wrong typo or you don't really understands how economics work. When supply changes, only the supply curve changes. Demand curve doesn't change when supply curve changes. If you don't really know that then there is nothing I can do but point you to some economics 101 book. When supply increases, you will have more goods than you can sell. It's natural that you will want to lower your prices so people will buy more so you don't have to throw away your goods. That doesn't mean people demand more stuff, you just have more stuff to sell.

In case you want to actually bring in real world example, people do undercut each other in the real world. Walmart is the best example as it tries to brutally lower its costs and undercut everyone else. When you don't see people undercutting you see a monopoly or oligopoly or firm with enough market power and product differentiation to set their own price. Microsoft OS aren't selling at $0 when it virtually costs $0 to produce extra copies? Try to find a legit copy of an OS that is exactly like Microsoft OS in every single way, including the colors and icons that can be obtained the same way Microsoft OS can be obtained. If you can't find it then Microsoft has brand power, market power and enough product differentiation to keep its price. There are other factors that can influence prices too but they are too advanced for someone without some economics background.

Umm... no, it's maximizing profits not costs High costs means you make less money. It's written in eco101 in case you don't know. And in case you mean price it's not that either cause you want to maximize profits that means you might want to sell more goods at a lower price rather than few goods at a higher price - depending on where you are on the D curve.



The difference is that it forces you consider whether you want to risk your item not getting sold and undercut or lower the price. If you think you have enough demand then keep the price high, if you think you are losing money because of taxes and items not getting sold then you will keep your price low enough (until you have 0 economic profits) so you can actually sell your products.

And no, people aren't really stupid, they can be ignorant, gullible and lazy but rarely irrational when it comes to their money. They might see 10 items for sale but they might not check to see if some item are selling at a lower price or not. You can't expect everyone to be the same. Similarly, sellers will guess that the buyers might not check the price so they will just keep their price high as they only sell less and not faster with a lower price.



Umm... no. That piece of paper you called money in your pocket has value because there is demand for it. A hyperinflation will drastically drop the price of money (yes money has price in economics) and so will the value of your piece of paper. ANYTHING with demand has value even if it doesn't exist physically (emoney, bitcoins and gil) or might not even exist at all (dreams, futures and debt). Relearn your econ101 class if you have done so.



I was referring to this and the other quote about microsoft (or software licenses) when I talked about your lack of understanding on supply and demand. The value of an item is the price that is dictated by the market, not what it costs to make it. When you have an increase in supply with the demand unchanged the price of the item will drop. When supply is low you will have the item selling at a high price. Examples would be the recent HDD price, PS3 and Xbox prices when they 1st came out on ebay.

Supply is not what a single firm can produce, it is what they are willing to make. Microsoft can make a billion copies of their OS licenses but they will only produce a couple million to meet the demand of their software. In a sense, they are a monopoly who set the price in such a way that they can maximize profits.



I am the only seller of drinking water in the world and I can set the price of $1000 per bottle and you will pay for it. I am the old internet provider in your area and you will pay me $100 per month for a 5Mbps DSL. It's not the same everywhere. Learn econ101.

Edited, Sep 27th 2013 12:09pm by Oddwaffle

Edited, Sep 27th 2013 12:14pm by Oddwaffle

Edited, Sep 27th 2013 12:15pm by Oddwaffle