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AH is a bad thing, anyone agree FFXIV should not have AH?
This is an interesting post someone posted, mew. 
ya they have good points, I knew AHs are corrupt but they are in fact worse than I thought! FFXIV is better without AH.
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My History with MMO Economics - feel free to skip this, it's just validation
I have always held a vested interest in economies in MMOs spanning from UO to WoW to FFXIV because, well, I like money. There is a trend that I have noticed: in games with a centralized market, crafting has a very hard time making profit (often incurring significant losses). I humbly offer my experience in various markets to help bring a better understanding of the AH and alternative solutions to the table.
Summary
The centralization of items into an auction house (or regional series) devalues crafted and gathered substances and supports RMT/botters. In the following sections I will go through the different ways that auction houses can (and are) manipulated for profit. Gatherers and farmers are able to make a baseline profit, but they too are exploited by RMT due to the AH.
How the AH Affects Crafting
Crafting is a very volatile topic. Typically someone who crafts either wants to profit or wants to avoid consistent charges (IE, Woodworking in FFXI to make arrows). The problem is that when an AH exists, people are given the absolute cheapest options. This seems like a good thing, but it creates a buyer's market. People start selling items at a small loss simply to raise their crafting higher. In an attempt to simply make some amount of money back, people start selling at huge losses. Even if you manage to cap your crafting skill, you will be making tiny profit margins among the other crafters. These profit margins will probably never make up for your overall losses. Even if an AH is broken up into regions, it is still extremely crippling to crafters (though there is a very slight reprieve).
Why the FFXI AH Masked Prices
This is a response tactic to making price tags too apparent. The intent was that buyers would continue to bid more for an item they wanted, allowing people to sell items at a slightly higher (and competitive) cost. Sellers were 'unaware' what a minimum cost was, and greed was meant to balance the scales. Unfortunately, the prices of items became somewhat standardized over time and this system really didn't fix the core problem. You are still always buying from the guy with the lowest price tag. (Which was usually RMT or a crafter trying to pick up the pieces of what used to be his wallet.)
How the AH is Manipulated
A word on bot-farming: You cannot compete with them, no matter how dedicated. Bots do not have to sleep, they do not have to eat, they do not have to use the restroom. They will run to every spawn as it spawns (based on best-guess temporal spawn rates) in the fastest possible path, and they will almost certainly be faster than you at grabbing it. This is a key reason why RMT is successful.
As I've said, AHs can be manipulated in various ways. I myself have used some of these tricks to profit; they become more effective as more information is readily available. First you must understand that there are intentionally created price curves. RMT will often stop selling items on the auction house in order to raise the base prices of objects. During this time they will also farm harder to influence players to raise their prices (time = money, and the competition is lower). They then will sell their merchandise back at a higher price. The price curve will fall as competition to liquidate your merchandise raises (typically with RMT item stock). One trick is what I call a material monopoly. These require a good bit of seed money, and incur a bit of risk management. Material monopolies are where you take an ingredient for a common craft, wait for a low price curve and suddenly buy out the entire market. You then repost moderate portions of said ingredient at significant profits. This takes some trial and error, but will ultimately post large margins of profit when done correctly (25% or greater per stack). Often times you need to liquidate the rest of your materials, simply wait until high points in the price curve and post your items again at a small profit per stack. AH taxes are actually a method of both preventing inflation AND this tactic. Who typically has the pockets to do this (and many other AH tactics)? You guessed it, RMT. It's practically robbery, they literally sell you a product and squeeze it back out of you.
Why Retainers?
Retainers are a method of decentralizing the market. What the heck does that mean? It boils down to this: one person cannot set a standard price. RMT cannot control the economy. Retainers are actually a fantastic idea and a very good thing. The problem is only with their execution. It's been said before, I'll say it again: market ward names are retarded. Nobody wants to be in the Northern Gafoopleboop, they want to be in the Blacksmith Ward or Weapons Ward. Retainers need to also be organized, people can't pick out specific retainers amidst the crowd (if it even loads). Retainers need icons where they can show that they are selling a specific type of item (weapons, armor, potions, etc). Players need to be able to locate retainers with specific items (read the next section).
What You Really Want vs. What You Need
This is actually a complex problem with many solutions. People want instant gratification. They want to stop by a box, click a few buttons, and walk away with their item. That's understandable. What people really need is not an auction house, or that little box. What they need is a directory, a way of locating the retainers with the items they are looking for. There are many ways of solving this problem, and could even be similar to the AH where you are looking for item 'x' and it shows you (on your map) where to find the retainers with this item. Then if you are dedicated you can go out and hunt down each retainer to find the lowest cost. Though this in itself could cost you quite some time and someone may take the lowest price item before you. It may be better to pay slightly more and support a crafter."
My History with MMO Economics - feel free to skip this, it's just validation
I have always held a vested interest in economies in MMOs spanning from UO to WoW to FFXIV because, well, I like money. There is a trend that I have noticed: in games with a centralized market, crafting has a very hard time making profit (often incurring significant losses). I humbly offer my experience in various markets to help bring a better understanding of the AH and alternative solutions to the table.
Summary
The centralization of items into an auction house (or regional series) devalues crafted and gathered substances and supports RMT/botters. In the following sections I will go through the different ways that auction houses can (and are) manipulated for profit. Gatherers and farmers are able to make a baseline profit, but they too are exploited by RMT due to the AH.
How the AH Affects Crafting
Crafting is a very volatile topic. Typically someone who crafts either wants to profit or wants to avoid consistent charges (IE, Woodworking in FFXI to make arrows). The problem is that when an AH exists, people are given the absolute cheapest options. This seems like a good thing, but it creates a buyer's market. People start selling items at a small loss simply to raise their crafting higher. In an attempt to simply make some amount of money back, people start selling at huge losses. Even if you manage to cap your crafting skill, you will be making tiny profit margins among the other crafters. These profit margins will probably never make up for your overall losses. Even if an AH is broken up into regions, it is still extremely crippling to crafters (though there is a very slight reprieve).
Why the FFXI AH Masked Prices
This is a response tactic to making price tags too apparent. The intent was that buyers would continue to bid more for an item they wanted, allowing people to sell items at a slightly higher (and competitive) cost. Sellers were 'unaware' what a minimum cost was, and greed was meant to balance the scales. Unfortunately, the prices of items became somewhat standardized over time and this system really didn't fix the core problem. You are still always buying from the guy with the lowest price tag. (Which was usually RMT or a crafter trying to pick up the pieces of what used to be his wallet.)
How the AH is Manipulated
A word on bot-farming: You cannot compete with them, no matter how dedicated. Bots do not have to sleep, they do not have to eat, they do not have to use the restroom. They will run to every spawn as it spawns (based on best-guess temporal spawn rates) in the fastest possible path, and they will almost certainly be faster than you at grabbing it. This is a key reason why RMT is successful.
As I've said, AHs can be manipulated in various ways. I myself have used some of these tricks to profit; they become more effective as more information is readily available. First you must understand that there are intentionally created price curves. RMT will often stop selling items on the auction house in order to raise the base prices of objects. During this time they will also farm harder to influence players to raise their prices (time = money, and the competition is lower). They then will sell their merchandise back at a higher price. The price curve will fall as competition to liquidate your merchandise raises (typically with RMT item stock). One trick is what I call a material monopoly. These require a good bit of seed money, and incur a bit of risk management. Material monopolies are where you take an ingredient for a common craft, wait for a low price curve and suddenly buy out the entire market. You then repost moderate portions of said ingredient at significant profits. This takes some trial and error, but will ultimately post large margins of profit when done correctly (25% or greater per stack). Often times you need to liquidate the rest of your materials, simply wait until high points in the price curve and post your items again at a small profit per stack. AH taxes are actually a method of both preventing inflation AND this tactic. Who typically has the pockets to do this (and many other AH tactics)? You guessed it, RMT. It's practically robbery, they literally sell you a product and squeeze it back out of you.
Why Retainers?
Retainers are a method of decentralizing the market. What the heck does that mean? It boils down to this: one person cannot set a standard price. RMT cannot control the economy. Retainers are actually a fantastic idea and a very good thing. The problem is only with their execution. It's been said before, I'll say it again: market ward names are retarded. Nobody wants to be in the Northern Gafoopleboop, they want to be in the Blacksmith Ward or Weapons Ward. Retainers need to also be organized, people can't pick out specific retainers amidst the crowd (if it even loads). Retainers need icons where they can show that they are selling a specific type of item (weapons, armor, potions, etc). Players need to be able to locate retainers with specific items (read the next section).
What You Really Want vs. What You Need
This is actually a complex problem with many solutions. People want instant gratification. They want to stop by a box, click a few buttons, and walk away with their item. That's understandable. What people really need is not an auction house, or that little box. What they need is a directory, a way of locating the retainers with the items they are looking for. There are many ways of solving this problem, and could even be similar to the AH where you are looking for item 'x' and it shows you (on your map) where to find the retainers with this item. Then if you are dedicated you can go out and hunt down each retainer to find the lowest cost. Though this in itself could cost you quite some time and someone may take the lowest price item before you. It may be better to pay slightly more and support a crafter."
ya they have good points, I knew AHs are corrupt but they are in fact worse than I thought! FFXIV is better without AH.
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