I think the whole idea is pretty cool. Of course, as a firm believer in the free market economy, I would. The thing is, this really isn't going to hurt anyone, and it really isn't going to let them corner the market. There is no friction to enter or leave the market.
Anyone can still come up and put their stuff up on the AH without worries. These guys then have two choices: Let them be undersold by people still putting things up on the AH, or buy this new stuff and reprice it again.
If they allow themselves to be undersold, then things eventually go back to some equilibrium point and the market adjusts itself. If not, then they have to pay the guy who put the stuff on the AH in the first place at whatever the current inflated rate is (because you can undersell them by just a tiny bit and they still have to buy you out or eventually the market will still correct) and that cuts into their profit margins in a big way.
Also, not everything sells on the AH, as I'm sure you are all aware. With the higher prices, there is a bigger deposit required. They aren't going to sell everything, and so their losses will also increase with the higher prices.
So, can these people still sell enough to move enough money through the AH to pay their losses? It depends on the actual market value of the AH. If they overprice things too much, people will rely more on friends, guilds, and their own skills to keep them supplied with what they need. If people do continue buying at the AH even at the higher rates, then all these guys did was to actually correct an underpriced market. I don't think that will happen, though.
The big question here is, with the very slim margins in the WoW economy, the big profits are not actually in-game money, but in-game time and content. People do buy off the AH to grind their skills because they don't want to spend the time harvesting the things themselves. In that case, you aren't just buying a product, but rather a service. And the marginal cost of that service compared the marginal gains is entirely dictated by the customer's own value and belief in the value of that service. If someone is trying to gain skills in blacksmithing but has limited play time, that person will pay a higher premium for pre-gathered goods with which to use in smithing. It also depends on each person's personality traits. How much fun does one person have gathering their own stuff? Do they view it as a challenge and actually have that add content to their game, or do they view it as a chore and a bother?
In the long run, with the way the WoW economy is set up (way, way better than SWG, I might add, or any other MMO I've yet witnessed) this won't affect much. Its going to be a good thing to some people, and a bad thing to others, just as everything else is. If the AH stays in this state with the inflated prices, it will end up being not bad enough for most and good enough for some to make it worthwhile. Because ultimately there are other options that are readily available for trade. PC vendors buy everything, and sell a lot. The other stuff is loot. And if people start to more on loot and friends and what they can make, the prices will go down in the AH.
To sum up:
The AH prices will drop if people want them to. To do so they can flood the AH with new auctions underselling the conglomerate. Or they can rely on second party methods to supply and sell their wares. The only way this will stay in place is if the majority of people decide the cost of forcibly replacing this system is too great to be bothered with. In this case, the net affect is only correcting an underpriced market, and the suppliers will actually make more profit off the stuff they gather. The economy will change aspects, but not really change in design. Certain people will make more money than others, and certain will lose money more than others, the same as it is now. The only main difference will be the change of people who make or lose.
_________________ Is life so dear, or peace so sweet, as to be purchased at the price of chains and slavery? Forbid it, Almighty God!
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