WoW Economic Collapse

Torgo

Torgo

2[H]4U
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Oct 16, 2002
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For the past month, a friend and I have been experimenting with the WoW auction house. Now, in real-life both of us work in the IST Supply Chain department of a multi-billion dollar company. Working our computer systems, we've got a pretty firm grasp of how supply and demand works in conjunction with cost and price point.

Without going into too much detail, we've (well, mostly my friend since he has the WoW account) used real world know-how to actually drive off almost all farmers from one server and totally take over key auction house markets. In other words, we've been able to be the only player offering items for sale. Anyone else trying to come in simply cannot compete. And yes, as an experiment (and for fun) we've pulled out of the market totally and re-entered and totally wiped everyone out.

We thought this was a fluke, so we tried it on another larger more established server with the same results. Again, no cheating is involved. This is pure Econ 101. Not only that, once the system is in place, it only takes 20 minutes a day to maintain it. This is without bots or scripts. As a Level 40 character, my friend was pulling in at least 25 gold a day just doing the auction house.

The scary part is that we've figured out that with a bit more work, we could actually collapse the Warcraft economy for every server. The good part is that we would eliminate all farmers (make it so that farming isn't worth the real world money you would get) but would cause a circa 1930s German economy of hyperinflation.

Obviously we don't want that to happen. We've proven to ourselves that our system works and fairly easy to implement. What's really strange is that while the farmers are extremely pissed, they can't seem to figure out how we're able to do this. Asians are completely confused, Europeans can't seem to grasp the logic and everyone else seems to be baffled. So me and my buddy are wondering, "Okay, if what we're doing is so easy to us, why hasn't anyone else done it?" On this large server we project that we can make over 1000 gold *profit* on each takeover if we wanted.

Now, I'm not a WoW expert by any means. I've never actually played, just watched and read up on it. I do however know game design and basic economics. So my question to this forum is: has anyone attempted a complete auction house domination before? Why didn't it last?
 
Way to brag and not even explain what you are doing? Buying low selling high? probably.
 
I'm very curious about this. If you'd rather not explain it publicly - and I totally get why - shoot me a pm. I've never even touched the game - nor would I want to - I'm just interested in the economics behind it.
 
MrFace said:
Way to brag and not even explain what you are doing? Buying low selling high? probably.
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People do that daily on Ebay, It is like that every where and not just in games. I know people that make their living buying and selling on sites like ebay and that make a lot of money but its a lot of work. This is really nothing new just finally someone applied it to a game and i am sure you are not the first
 
Slartibartfast said:
I'm very curious about this. If you'd rather not explain it publicly - and I totally get why - shoot me a pm. I've never even touched the game - nor would I want to - I'm just interested in the economics behind it.
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From the original post "This is pure Econ 101". Go read a book and stop trying to steal his 1337 h4x! ;)
 
Tazman2 said:
From the original post "This is pure Econ 101". Go read a book and stop trying to steal his 1337 h4x! ;)
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I haven't been in an econ class in, oh, 6 years, and I only took it to graduate hs :p
 
unless you are camping the ah all day, you cannot corner a market. and i doubt you drove farmers off a server, they just do their thing all day every day, and dont care what stuff sells for.
 
nice! and you just watch..2 funny! it amazes me the re-hab-tarded depths some people go in that game
 
There's no real point to it, unless you just care about money. Let's say you make 10,000 gold... there's nothing to spend it on. All the good gear comes as drops.
 
Every server usually has a big name who's worked the auction house for personal gain. In virtually all cases the farmers either profit or are unaffected.

In the end, the farmers are the supply, they're creating both the items and the money. I can't think of a scenario where someone could make a profit themselves while at the same time eliminating the people who actually introduce the items into the system. Especially for a limited time investment.
 
unless you actually explain what you're doing.. its not true. Farmers dont farm the AH to resell.. they farm and sell on the AH. So by supposedly "cornering" the market.. i can assume you buy out all of 1 item and repost the item in a more limited supply at a higher markup... oh but wait.. you just bought the farmer's items. he wins. and 25g a day? please.. I pull that much gold on single transactions.
 
I'll explain a bit more. My buddy has created a character with certain skills that can produce an initial amount of supply of a commodity. Say gold bars. We can enter the market and corner the low end of the market. If anyone tries to go lower, we can either go lower ourselves or buy out that supplier, repackage it and put it out at our low price.

Nothing new right? Well, the difference is that usually people get greedy and jack up the price after a while. We, on the other hand, keep the market price for gold bars artificially low. No one is willing to buy the more expensive gold bars because ours are so much cheaper. In essence, we've taken out the profit for anyone else to produce or sell gold bars.

But you're saying, "What's the point of that? You're not making that much money." Sure, we could be making a greater profit margin, but that gives up control of the market. We stay low and drive off everyone. After a week, no one was selling gold bars in the Horde marketplace.

We've tried other goods, like silk and some fish like thing. (I forget what it's called at the moment.) Anyway, the result was the same. After a few days, all the farmers abandoned those areas of the auction house. Now, this was a small server and we wanted to try it on a larger more established one to see if it could be replicated. We've done it on two other larger servers with the same effect. There's a point where we could actually affect both supply and demand based on price and what we made available. Yes, it's possible to horde and flood the market with a good.

As I mentioned earlier, the object isn't to necessarily make a large profit. That's the key. The idea is to make it unprofitable for everyone else until you have a complete monopoly. Once you have that established, you can increase your profit margins slightly but you can always crash the market whenever you want. For example, we totally left the gold market alone for a week and the price of a gold bar went back up to about 1g per bar. We re-entered the auction house with over 100 bars on this small server and set the price to a ridiculous price of 40silver. Everyone currently in that market lost their shirt.

Basically, we turned the auction house into a futures market in which we can control. You don't need to be a high level character either to pull this off. My friend was in the mid 30's when he decided to first try this out. Now in the real world, you couldn't get away with this. There's regulatory agencies and consumer groups and the WTO, OPEC, etc. There's nothing like that in WoW. The only thing that could break our system is a highly organized boycott of our auctions, but like that would ever happen... :rolleyes:

Worst case scenario if we wanted to be total bastards is to totally corner the auction houses with a small guild using our techniques (obviously I left out details because I don't want some knucklehead actually doing this) to cause hyperinflation. All raw goods suddenly become extremely expensive. The only market that we really can't control are drops, but we don't care because the time involved "farming" those items are a waste of time to produce money. Anyway, with the economy in tatters, high-level characters would eventually be hard pressed to maintain their equipment. The only ones with money are the guild members.

The only thing that we haven't determined yet is if there is a maximum limit to the amount of items that you can auction at a single time. If there is a limit, that only prevents one person from totally dominating the auction house. A small group coordinating together could still take it over.
 
Gongo said:
So by supposedly "cornering" the market.. i can assume you buy out all of 1 item and repost the item in a more limited supply at a higher markup... oh but wait.. you just bought the farmer's items. he wins.
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We have a method (which I shouldn't mention exactly how to do it, but it does not involve any cheating or game exploits) where we create our own initial supply. The farmer gets nothing from us. Now, we might buy out his inventory at some point, but only at a loss for that farmer. The farmer ends up just breaking even or perhaps at a slight profit. But that's only when we first enter the market. Because we so utterly dominate the market with our pricing structure, there's no way the farmer can make an effective profit. So he just ends up leaving.

My friend and I are pretty sure that we could totally drive away all the farmers from the entire game if we wanted to. I mean, everyone knows that these farmers are basically a bunch of Chinese workers in a warehouse somewhere doing all this work. I could hire a bunch of high school students in my own warehouse doing the same thing, but using my method. Once I own a small minority of the auction houses I would have enough WoW gold stockpiled and I could then use my method on Ebay to sell that WoW gold for like a dollar. Again, I'm not out to make a profit. My goal is to drive everyone out of the farming market at that point. Who is going to spend $20 for 100g when you can get it from me for just $1?

My friend and I actually planned that scenario out and it could work. Of course, we know that Blizzard would step in (probably) and do something about it. Or maybe not. They could just let us run every farmer out of business. I would want some police protection though because there would be some really pissed off mafia figures.
 
dotK said:
There's no real point to it, unless you just care about money. Let's say you make 10,000 gold... there's nothing to spend it on. All the good gear comes as drops.
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Actually we don't care about the money. We're really more into it from the macroeconomic experimentation that we can do. It's not about the money as it is about actual control. Our system breaks the moment you get greedy.
Talon Blackrazor said:
In the end, the farmers are the supply, they're creating both the items and the money. I can't think of a scenario where someone could make a profit themselves while at the same time eliminating the people who actually introduce the items into the system. Especially for a limited time investment.
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I'm leaving out the supply side of the equation on purpose. We've got that covered. Any farmer that comes in after us just ends up working for us without them realizing it. It's not about profit as it is about having a monopoly. That's what makes it work. It ends up being a long term investment.
 
But then you'd be the farmer, and Blizzard would probably not hesitate to ban you and all your associates.
 
I'm curious, and maybe this is my lack of knowledge of economics, but what is preventing players from eliminating you from the market? There is an addon called auctioneer that I regularly use, and with it I can filter out items on the auction house that are going to make me the highest profit.

With your gold bars at 40s each, I would run a auctioneer scan and it would pick all those gold bars and would establish that I could make a 60s profit off of them if yesterday they were selling for 1g each.

With the amount of gold I have, I could easily run you out of the market. Purchasing my bars for 1g and turning around and selling them for 40s would just make me turn around and purchase them back for 40s and put them back on the market for 1g.
 
Anyone else getting a Don Torgo feeling all of the sudden? :D

By all means keep this discussion up, I'm very interested in this topic.
 
gamz247 said:
But then you'd be the farmer, and Blizzard would probably not hesitate to ban you and all your associates.
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For what? There is absolutely nothing "legally" wrong with farming. Selling ingame items/currency for real-world currency is what is against the ToS.
 
If you claim you're controlling the economy of an entire server, and only making a 25ish gold a day, or as you said "1000 gold profit", then you have no clue what you're doing. There are AH players on my server and in my guild who have 5 figures in gold and play the AH in ways that make you look like a kid with a lemonaid stand.
 
the idea if flawed because it revolves around the lower end items that are easily farmed by any 60, and are not in high demand. people use the AH for crafting and after they exceed that level of craft, they dont need it anymore. try your theory on anything in a skill set of 250+ and it will be a different story.. things like mithril/thorium and any 250+ herb will quickly disprove your ability to corner a market. besides, farmers dont farm SM for silk.. they farm for boe blues.. silk is just a by-product. and no one farms gold for anything meaningful.

now if you told me you were somehow able to corner the dreamfoil market or the thorium market.. thats a different story. You simply dont seem competition for stacks of wool from the real farmers.

I personally have close to 5 figures in gold and probably double that in mats. when I play the AH i play with no less than 15-20g purchases per item to corner a market. Play with the big boys and it's a whole new ballgame.
 
Gongo said:
the idea if flawed because it revolves around the lower end items that are easily farmed by any 60, and are not in high demand. people use the AH for crafting and after they exceed that level of craft, they dont need it anymore. try your theory on anything in a skill set of 250+ and it will be a different story.. things like mithril/thorium and any 250+ herb will quickly disprove your ability to corner a market. besides, farmers dont farm SM for silk.. they farm for boe blues.. silk is just a by-product. and no one farms gold for anything meaningful.

now if you told me you were somehow able to corner the dreamfoil market or the thorium market.. thats a different story. You simply dont seem competition for stacks of wool from the real farmers.

I personally have close to 5 figures in gold and probably double that in mats. when I play the AH i play with no less than 15-20g purchases per item to corner a market. Play with the big boys and it's a whole new ballgame.
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qft. The "market cornering" being described here is pretty lightweight. A guy on my server does his best to corner the market for boe purples, and has 20k gold at any time and 30ish boe purples. That's a far cry from making some easy money on buying out stacks of wool.
 
Jason Isom said:
With your gold bars at 40s each, I would run a auctioneer scan and it would pick all those gold bars and would establish that I could make a 60s profit off of them if yesterday they were selling for 1g each.
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We installed Auctioneer as well to see what it was saying about our market. While it does a good job of monitoring trends and price points, it isn't perfect. It doesn't work very well with our system.

Now using your scenario, you could try and buy us out of our supply. That's actually been done before and we've let it happen on purpose. We're not putting out our entire supply when we do this. Because we've figured a great (and cheap) way of producing certain key goods, it costs us hardly anything to build our initial supply.

Let's say our cost for making gold bars is 20s. If you buy us out at 40s, we've just made a 100% profit. We can just re-enter the market at 20s and break even. Now you're selling your gold at 60s. It cost you 40s to buy our inventory, now you've got to drop down to at least our price of 20s. You're now losing money. You've lost your investment and there's no way that you can match our production cost. We're always breaking even, and you're always going to be losing money.

Now this is simplified of course, there's more to it than just that. But essentially that's the gist of it. Usually we're in the position of being at 40s and if anyone goes lower than us, we buy their inventory and sell it back at our price.

I can't stress enough that the key isn't to necessarily make money. It's to first establish the monopoly and then getting your money from those profits. So in the end, we're like the Walmart of WoW. No one can match our prices and we drive out all the mom and pop stores.
 
you're not putting mom and pops out of business, you're creating a guaranteed sale for every noob who puts up those items to get rid of them, and yes you make a reasonable profit from the 60s who are using the items to level up their crafting and such. The idea that by cornering the wool market you're controlling the wow economy is silly.
 
WoW... Torgo, you obviously arent doing very good. Im on a server with 23000 people. You say you undercut people and drive them out of the market, I ask how do you undercut a farmer who sole purpose is to undercut you? They farm mats all day long, they do not care what they go for as long as they are the cheapest. In fact its easy to artificailly lower the market, you find an item you want to buy alot of cheap, you simply list a bunch of that item for really cheap and any farmer on my server selling that item will undercut you by a couple gold at least. On a huge server you can make 200g in 10 min of trading if you know what your doing. Cornering a market is nothing new to WoW.
 
Torgo said:
You've lost your investment and there's no way that you can match our production cost.
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In many cases, the only production cost involved with crafting in WoW is time spent, especially in the case of raw materials.

Torgo said:
We're always breaking even, and you're always going to be losing money.
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Not if he's buying out your 40s and 20s stock and reselling it for 60s. You're "breaking even", but he's making 20-40s per transaction because there's only a limited number of items you're putting up for auction. Any time an item is put up for sale less than yours, you buy it up. Any time an item is put up for sale less than his, he buys it up. It's hard to create a monopoly when everyone's buying everyone else out.
 
Torgo said:
I can't stress enough that the key isn't to necessarily make money. It's to first establish the monopoly and then getting your money from those profits. So in the end, we're like the Walmart of WoW. No one can match our prices and we drive out all the mom and pop stores.
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I think that this is the key to your entire system here. As long as you aren't interested in maximizing PROFIT and more interested in selling at a small-enough margin and counting on VOLUME to make up for any extra revenue loss, you're probably on the right track. There are many companies that sell more specialized products than does Walmart (and correspondingly higher columes) but can't match the volume that you can get by selling at such a low margin. As long as production costs don't exceed sales cost (even running a 1s margin, or less(?), is enough margin) then you're not going to have a problem.

The business plan isn't instant profit, it's a takeover strategy. Can you draw any parallels to real world companies? Walmart is ok, but I don't think their margin is thin enough (no numbers to back me up) to truly reflect what you are doing here.

It's an interesting thought experiment and probably worthy of watching a little bit. I don't know about making the market crash, I suppose it might be possible to do for a little bit... but you would need to keep a tight control on SUPPLY.

I also think that, really, this is only possible on the lower end of production chain. To continue the Walmart analogy, I imagine that most people (I know that I certainly don't) don't go to Walmart for anything but the "essentials" (low-level items). When I think about TV's or electronics, or storage systems, or tools, or anything, in short, that requires a little bit more than say, toilet paper, Walmart is not where I spend my money. It's been mentioned a few times that the game changes with higher level or more expensive type items and it does but only because the target sales audience is different and the skills required to produce supply are so much more specialised. Now, if you can get a guild behind you that can produce these items, we'll be talking a differrent game.

It's worth noting that PCGamer has, a few times, mentioned that economists watch games like this because of the different behaviors on the macro level that occur and their results. Keep it up!

edit: I haven't played WoW since the beta days so my view on this whole topic is a little limited. Also, on any MMO I play, I have had no interest and probably would have no interest in something like an AH. So my thinking may be skewed a bit here.
 
This is not the first time this has been done, this has been going of for years in WoW, on more than one server.

Almost a year ago I remember a post on the wow forums from someone who made 30,000 gold in a short time just from buying low, selling high, and monopolizing certain item groups. That person posted step by step everything he did, I must say its quite interesting and possibly fun if you are a 'playing the market' type of guy.

Theres disadvantages like
(1) You pretty much spend all your time in the auction houses, and not actually playing the game (not saying anything wrong with that really)
(2) You become hated by many of the players on the server who realise what you are doing, and will pretty much be treated like shit, and most end game guilds will spit on you if you think about asking to join. Create an alt if you have to do this.
(3) Eventually it gets boring as hell.
(4) Most players who do this sort of thing do it for gold profit, and it ruins the game for legit low level players who cannot afford the monopolized prices of goods, which they would have been able to if you were not playing the market. This makes the game much more frustrating for them, and for this reason I will never do such a thing. I'd feel too guilty.

But I must admit it sounds fun, and probably exciting at first, strategically playing around with the WoW economy. Once you're having fun I guess, thats the point of playing isnt it :p

dotK said:
There's no real point to it, unless you just care about money. Let's say you make 10,000 gold... there's nothing to spend it on. All the good gear comes as drops.
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Ever played on a very high population pvp server in a serious end game raiding guild ? Seen the AH prices on one of those ? I've spent more than 10k gold just on greater fire protection potions alone.
 
Drexion said:
Ever played on a very high population pvp server in a serious end game raiding guild ? Seen the AH prices on one of those ? I've spent more than 10k gold just on greater fire protection potions alone.
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Yes, and we stopped using fire pots long ago.
 
dotK said:
Yes, and we stopped using fire pots long ago.
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Yes, but after the fire pot boom, then the shadow pot boom, then nature etc etc. And thats just potions, theres other things generally needed which can be very expensive on high pop servers.

Point is you are incorrect in saying there is nothing to spend 10k gold on.

If you meant for casual players, then you may have a point. Even semi casual players may want to spree on boe epics and what not.
 
GG Dreamfoil is going for 25g a stack on my server... and we need like 80 stacks for naxx runs.
 
Torgo said:
I'll explain a bit more. My buddy has created a character with certain skills that can produce an initial amount of supply of a commodity. Say gold bars. We can enter the market and corner the low end of the market. If anyone tries to go lower, we can either go lower ourselves or buy out that supplier, repackage it and put it out at our low price.

Nothing new right? Well, the difference is that usually people get greedy and jack up the price after a while. We, on the other hand, keep the market price for gold bars artificially low. No one is willing to buy the more expensive gold bars because ours are so much cheaper. In essence, we've taken out the profit for anyone else to produce or sell gold bars.

But you're saying, "What's the point of that? You're not making that much money." Sure, we could be making a greater profit margin, but that gives up control of the market. We stay low and drive off everyone. After a week, no one was selling gold bars in the Horde marketplace.

We've tried other goods, like silk and some fish like thing. (I forget what it's called at the moment.) Anyway, the result was the same. After a few days, all the farmers abandoned those areas of the auction house. Now, this was a small server and we wanted to try it on a larger more established one to see if it could be replicated. We've done it on two other larger servers with the same effect. There's a point where we could actually affect both supply and demand based on price and what we made available. Yes, it's possible to horde and flood the market with a good.

As I mentioned earlier, the object isn't to necessarily make a large profit. That's the key. The idea is to make it unprofitable for everyone else until you have a complete monopoly. Once you have that established, you can increase your profit margins slightly but you can always crash the market whenever you want. For example, we totally left the gold market alone for a week and the price of a gold bar went back up to about 1g per bar. We re-entered the auction house with over 100 bars on this small server and set the price to a ridiculous price of 40silver. Everyone currently in that market lost their shirt.

Basically, we turned the auction house into a futures market in which we can control. You don't need to be a high level character either to pull this off. My friend was in the mid 30's when he decided to first try this out. Now in the real world, you couldn't get away with this. There's regulatory agencies and consumer groups and the WTO, OPEC, etc. There's nothing like that in WoW. The only thing that could break our system is a highly organized boycott of our auctions, but like that would ever happen... :rolleyes:

Worst case scenario if we wanted to be total bastards is to totally corner the auction houses with a small guild using our techniques (obviously I left out details because I don't want some knucklehead actually doing this) to cause hyperinflation. All raw goods suddenly become extremely expensive. The only market that we really can't control are drops, but we don't care because the time involved "farming" those items are a waste of time to produce money. Anyway, with the economy in tatters, high-level characters would eventually be hard pressed to maintain their equipment. The only ones with money are the guild members.
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It's an interesting concept, and it seems that it worked out for you in certain niche markets, but I think it breaks down once you move towards items that are in real demand.

Gold Bars and Silk Cloth are very low demand items. Neither is specifically farmed, and virtually all auctions of them listed at any given time are the by products of people leveling characters. Neither have any mainstream use other than mid level crafting, of which there is very little repeat activity, i.e. someone buys 300 Silk to go from 150 to 225 tailoring, and then they don't have to touch it again.

At this level of business you haven't even come up against the farmers generating gold to sell.

What the famers are going after is high level items mainly used in comsumables that need to be contantly replenished: Dreamfoil, Thorium, Dark Iron, etc. and the farming of gold directly via grinding mobs.

The last method is directly untouchable via economic means. There's nothing you can do to control how many mobs they kill. The demand for the first items mentioned is so great, that you would need enormous stockpiles to accomplish the initial glut, and would probably just encounter other players who buy your lower priced items and relist them at the previous rate.

In the end, controlling the AH will have very little effect on professional farmers. Their primary focus is generating gold via liquidating their items for whatever price. There was a time on my server when the supply of Thorium was so high, due to a discovered hack, that it was more efficient to sell it to the vendors rather than unload it via the AH, and that's what the farmers did. Player economic conditions are easily weathered by farmers, who just need to fall back to their main staple of grinding to counter it. It's an unchangable constant.

I'd be very willing to be proven wrong, if you can demonstrate the method's success on a highend market on an established server.
 
Thanks for the feedback. Let me answer and respond to a few points made.

Gongo said:
the idea if flawed because it revolves around the lower end items that are easily farmed by any 60, and are not in high demand.
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That's what most people think. That's not how the real world works and it does translate back into WoW from what we've seen. There are certain key raw goods that are further used in other items down the line. In the real world, oil is used in gasoline, plastics, energy production and so forth. When the price of oil goes up, so does the price of the end resulting products. In WoW this can be gold bars, silk, deviants and other items. Control the raw goods and you can affect the price of other items down the line. More on this in a bit.
Technoob said:
The "market cornering" being described here is pretty lightweight. A guy on my server does his best to corner the market for boe purples, and has 20k gold at any time and 30ish boe purples. That's a far cry from making some easy money on buying out stacks of wool.
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There's two ways at looking at this scenario. BoE purples are basically a luxury item. The time it takes to acquire and the power that you get from them demand their high price. If your goal is to make money, then you can make a pretty high margin on those items. This is a market that we're not really interested in because of the high buy-in entry price to acquire an inventory and enter into the market. Also supply is a problem since there's a high cost to market ratio on these items. A single person "harvesting" these items would spend a lot of time acquiring his inventory to sell. Now this is great if the profit margin is high, but what if I come in and collapse the market? One more quote and I'll bring it all together...
murkle said:
You say you undercut people and drive them out of the market, I ask how do you undercut a farmer who sole purpose is to undercut you? They farm mats all day long, they do not care what they go for as long as they are the cheapest.
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This is going on the assumption that farmers are going for the cheapest price point. If you look around on the servers you'll see that isn't the case. Understand the goal of farming is to make the most gold in the game to sell in real life. These farmers have real-world costs... something I don't have to worry about. I'm not worried about making money. Our total goal is to monopolize the market for whatever good we're doing.

By capturing key raw markets, you can affect the market as a whole. Everyone is used to the market inflationary pricing. Over time, the prices go ever upward. That's because the supply in kept in check and the general supply of gold currency available increases. Farming does this. For $100 I can go buy 2000g and overpay for a bunch of crap at the auction house.

Our method actually introduces an initial deflation in the marketplace. We keep the price of goods artificially low on purpose. With the margins on any goods kept so low, the real world farmers have a sudden rise in their cost of goods-to-gold-to-real money ratio. They have to work twice or three times as hard to get gold in WoW to sell for real money. Remember, they still have to pay for all that child labor in that warehouse sitting in front of their computers. The farmers can no longer afford to stay in that market and leave for another server because they can get a better margin.

Okay, so they try to undercut us. As I mentioned, we've discovered a good combination to producing key goods cheaper than the farmers can. In other words, we can't be undercut. We also use some other real-world supply chain strategies that most people don't seem to get. Eventually, the pain the farmer feels is too much and they pull out. They think that eventually we'll jack up the price and they can jump back in, but we don't. We keep it low enough where we have a small margin and maintain control. Control being the most important part. Over the long run, we end up making more money. Many of y'alls examples are short term gains similar to day-trading in the stock market. We're playing the futures market and long-term investing.

Let's play this out a bit further. To the consumer, we're always going to be the best deal in town. We always have a successful auction because of our super low prices. The public at large is incredibly friendly to the guy who's giving everyone a great deal. My friend is playing with his main character doing this method. On a PvP server, he's able to go to the neutral auction house without a hassle because players on the server know he's making an auction run. Sure, he's got ganked everyonce in a while by farmers. The funny thing is that the farmers are in the minority. We had allied players escorting a horde character to the auction house so they could get their raw ingredients for potions or whatever from my friend's character. Instead of being hated, he's actually quite well-known and respected.

Part of that is because we choose our markets carefully. We're not in every sector. We don't need to be. But if we wanted we could, and we have. Let's take the BoE Purple market for example. It's fairly easy to take it over. Once you ensure that you have a proper supply of items and the gold necessary (we have a formula worked for that) you can take over the market and absolutely kill everyone else there with pricing. The key at first is not to necessarily make a profit. It's to drive the price down to the point where it's too painful for everyone else to stay in the market. You start selling 100g rare items for 10g and you'll effectively crash the market. Just remember if you want to keep control you have to keep the prices artificially low.

Once you cause deflation on a server, you're pretty much taking over the supply of currency on that server. It's possible to at some point to introduce hyperinflation. Since you control the all raw goods and the gold currency supply, you can jack up the prices sky high on everything. At that point, it becomes too expensive to enter the market to squeeze us out, and if you tried, we'd just dip back down and wipe you out.

This is all long term and a hyperinflated market is *not* what we want. It's more fun to cause a deflation which rids the server of most farmers and makes goods available to everyone for a great price. This is totally the opposite of what Drexion commented on. Does anyone really hate Walmart because of their low prices? "Darn it, they're charging too little for that DLP television!" arkamw seems to get it. We only want to stick to the basics which over the long term seems to be working the best.

Some quick points and then I'll shut up: My friend only spends 30 minutes max. working the auction house. That's all it takes. While the amount of gold may seem small to some of you, keep in mind we're not really lifting a finger once the system is in place and when you're the only player in town, you make up for in volume in the long-run.

I'll see if I can't get some screenshots of the auction house to prove these points. Thanks for the input guys. You did give me some more things to think about and try out.
 
Talon Blackrazor said:
What the famers are going after is high level items mainly used in comsumables that need to be contantly replenished: Dreamfoil, Thorium, Dark Iron, etc. and the farming of gold directly via grinding mobs.

The last method is directly untouchable via economic means. There's nothing you can do to control how many mobs they kill. The demand for the first items mentioned is so great, that you would need enormous stockpiles to accomplish the initial glut, and would probably just encounter other players who buy your lower priced items and relist them at the previous rate.
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We recognize that this is one of the weaknesses in our plan. Using our supply-chain formula we recognize that the initial cost of taking over a good like Dreamfoil is extremely costly, but possible. To pull it off, we needed to take over the raw good markets first to establish a steady stream of income to weather any sort of assaults.

Once we accumulate enough stockpile and gold to control the market, we're pretty confident that no one will be able to undercut us enough to keep us out. We would just need to insure a steady supply is on hand. Something on this level and type of item you would almost require the help of a guild. As long as you have a good reputation and are honest and fair, you could set up a mafi... uh, er... co-operative group to supply you with items and keep the prices low. What's funny is that you end up being coming the Anti-farmer.

I'll talk it over with my friend and take up your challenge. We want to know how feasible this method is to other markets, so this sounds like a great experiment. It might work, it might fall flat on it's face. If we do it, I'll post regular updates.
 
Torgo said:
This is going on the assumption that farmers are going for the cheapest price point. If you look around on the servers you'll see that isn't the case. Understand the goal of farming is to make the most gold in the game to sell in real life. These farmers have real-world costs... something I don't have to worry about. I'm not worried about making money. Our total goal is to monopolize the market for whatever good we're doing.
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I am assuming nothing, this is how it is on my server, I have been playing for over a year. You say these farmers have real world costs that you dont have to worry about? You have no Idea what your talking about, they farm 24/7, they are paid around 50 cents an hour. While you have a job that prevents you from being on, their real world costs are the same as yours. You have to pay for internet and wow and so do they. They will undercut you no matter what on my server. You will never have a monopoly when there are 5 charectors that farm one item 24/7 and will undercut you no matter what.
 
Would this work on high-lvl goods? I don't think so. Corner the dreamfoil/thorium market and I'll be impressed. Gold/Silk are trash goods. No one even bothers farming them. You aren't putting farmers out of biz, because farmers don't touch these items.
 
I say go for it Torgo. All of these people don't see how it can be done, so show them. Take a couple of months and build up the stockpiles of needed ram meterials and step it up to a needed material. then collapse the market. Not only would it be funny to see, it would be a great idea for a low level college or even highschool marketing class. Just imagine if several professors had their students playing wow to cause a market crash all working together.
 
Damn if I had WoW I would ask Torgo if I could help him with his experiment. To me, it sounds HIGHLY intriguing. I'd love to see how this would pan out in the long run.
 
Technoob said:
If you claim you're controlling the economy of an entire server, and only making a 25ish gold a day, or as you said "1000 gold profit", then you have no clue what you're doing. There are AH players on my server and in my guild who have 5 figures in gold and play the AH in ways that make you look like a kid with a lemonaid stand.
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Heh, I play Dark Age of Camelot and enjoy watching people trying to do that. I've played it since launch and have so much money/farming ability that if someone undercuts me on an item, I simply buy it and resell it for the price I had mine at... it'll sell eventually, and I have enough money at my disposal that it simply doesn't matter. Between the two realms I play on there I have close to 2200 platinum pieces in CASH, let alone items of worth. Most people in that game, for reference, would think they had won the lottery in real life to have 100 platinum. From the sounds of this thread, this guy is simply doing basic buy-to-resell investment, and he isn't playing with much cash :(. I've been literally monitoring the market for specific items of consistent/long-term demand for ages in DAoC and buying them up anytime one shows up, slapping it on one of my merchants, and laughing all the way to the bank as buyers can't find one cheaper :D! I know, evil, but it has worked! Another thing I'll do is if I see an item with demand over time, I'll farm so many of them I can flood the market to the point where no one would want to farm it to sell due to the difficulty (for most), and the potential profit for time invested versus another item. It's amazing how many people don't know basic economics in these games!
 
wow...this is kinda crazy....
You should try this with EVE Online's economy....that game has the most advanced economic simulation I ever seen.......
 
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