Last time, we looked at some of the pricing implications of the Diablo 3 auction house fee structure and why Blizzard implemented these fees. This time, we’ll propose some other fee systems and consider some economic ideas that have relevance to the Diablo 3 auction house.
One of the basic ideas of economics that gets thrown around a lot by laymen is “supply and demand“. They are really two separate ideas that can be used in conjunction with each other to predict market behavior. Let’s delve into some of these economic ideas to approach the auction house and its fees.
To make a basic graph of what “supply and demand” looks like, we need to understand how suppliers and consumers react to pricing. Intuitively, if something (lets say a super-awesome sword) can be sold for a high price, people are going to do what they need to in order to get it so that they can garner a large sum of money. Conversely, if the sword is offered at a lower price, less people are going to be willing to sell it. At higher prices, more swords will be offered for sale, and at lower prices, there will be less swords. As for consumers, they will buy more swords the lower the price is, as they will be able to more easily afford them at lower prices and be more willing to part with less of their hard-earned cash. At higher prices, people will only buy swords if they really want them. Thus, at higher prices, less swords will be bought, and at lower prices, more swords will be bought. If we asked sword-producers how much they would sell a particular sword for at a variety of prices and graphed it, then asked sword-consumers how many swords they would buy at a variety of prices, we would get a graph like this:
The important idea is that the supply curve has a positive slope, whereas the demand curse has a negative slope.