What's the economical design difference for a global auction house or seperate auction traders?

Question

I'm playing The Elder Scrolls: Tamriel Unlimited and there we have local auction houses. (Thy don't have auctions, but I keep the term to not get confused in the following text.)

I can see the advantage that guilds (who own these AHs) can set up their own little economy, which is a nice feature.

On the other side I always have to check several guild traders to see which one offers my searched item for the lowest price.

On the forums, people are discussing heavily whether a global auction house should be introduced or not. This may have pros and cons, too, but I'm not too involved in this game design to really set up a mind for that.

Backers argument that an global AH leads to a more regulated market, easier to use and a seller will reach a broader audience (reads: When you put in an item, you can be sure that there may be a buyer.)

On the other hand critics say that this will make only really useful items get a massive increased price and common used items will drop their prices to their normal selling price.

But are these concerns really true? Would the introduction of a global AH really have such a big impact on the game's economy? And if yes, will they more tend to even the prices or really make most of the items useless for selling?

You could also ask vice-versa: If a game already has global AH, what would the impact be if they replaced it with local auction houses?

What is the difference for the game's and players' economy if you introduce a global or local auction house system?

For clarification: I do ask this for the matter of The Elder Scrolls: Tamriel Unlimited. But you can also subject this to other games. (This should be more a theoretical question for a developer's decision.)

Answer 1

This basically boils down to basic economic theory, more specifically the concept of market transparency.

When someone wants to buy or sell a fungible good (like most items in a common MMO game), they will look for the best available offer on the market and take it. In order to find this offer, they need to obtain full market transparency by looking at all places where the good can be offered.

By centralizing all offers in one place, you make it much easier for players to obtain market transparency. By spreading out the offers over many places you make it harder for players to obtain market transparency, but not impossible.

Those who are eager enough to put in the effort to obtain a better market transparency than others can make a profit by buying cheap in one market and selling high in another. But their activity will balance out the markets so that certain items will be worth almost the same in all markets.

So in the end having multiple separate auction house is just one thing: a bad user interface. It adds nothing to your game except forcing players to travel around and check all the different auction houses until they found the deal they want.

However, it can get interesting when you add locality to the equation, e.g. what if there is a cost for traveling between auction houses? Or what if some markets are unavailable to certain players because of their current game progress? In that case players might take suboptimal deals to avoid the cost (in time and/or resources) of traveling to a remote location. Under this condition prices could have regional variations. This means players who are willing to take the travel-cost others won't for an opportunity to buy low in one place and sell high in another will have the opportunity for a considerable profit margin. This can add an interesting additional trade component to your game when done well.

But keep in mind that adding cost for changing markets means that you need to remove three features which are very popular with players:

1. fast and cheap travel
2. fast and cheap item transfer between characters
3. large inventories

This won't just affect the trading component but also many other aspects of your game. Think carefully if this is worth it.

Answer 2

Nickson104 already wrote a pretty nice summary in his comment.

I've been playing the game since early beta and I prefer the small AHs, so this might be a bit subjective, but overall the most important points have been mentioned already:

• A global AH makes it far easier for players to find the item they want at the cheapest price (which they usually want as well).

• A global AH makes grants a far bigger reach to single offers, so sellers will sell their wares faster as well.

However, both points have their downsides as well:

• With only one big auction house, it's far easier to find the cheapest or best offer, so sellers will actually have a harder time getting their asking price and underbidding would be even more common.

• At the same time, rare items will be sold a lot faster (due to bigger audience seeing the listing), which at the same time will raise prices for those.

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Of course this is all but proven, but there are actually games out there I've played, which show this exactly. Take Guild Wars 2 as an example:

• As a player it's almost impossible to sell common wares in a reasonable time. For some crafting materials you can't even use the AH's feature "suggest a price", because it would undercut the minimum asking price (which is fixed to the price NPCs will buy the stuff for).

• At the same time rare items (like legendary weapons) are very expensive and still raise in price, since there's constantly new money pumped into the economy and it's easy for players to find some demand, even for ridiculous prices. It's essentially a slow and steady inflation and there's hardly anything you can do to counter that (except adding massive money sinks, which in the end just promote even higher asking prices).

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Now looking at a small scale "auction house landscape" like what The Elder Scrolls Online (or Eve Online) offers, you'll quickly see that it's definitely harder to find the best price for some specific item you want. The market is partially intransparent, but not in an unfair way. If you invest the little extra time, you can compare prices to save money or make some more money. It might be less convenient, but at the same time I consider it the far superior (and more realistic) system, especially considering those games are still called MMORPG.

Answer 3

Keeping in mind that in a perfect market, one has to know everything about the market (this includes of course price and quantities available):

With a local market:

• More chances to get ripped off (because you don't know all the prices)
• More possibilities to rip others off (because they don't know all the prices)
• More chances for a local monopoly (because the market is reaching a smaller amount of players)
• Much harder to implement a global monopoly (because you have to travel more to achieve it)
• More gameplay possibilities (some will arise as pure traders: buy low somewhere, sell for a profit somewhere else)

With a global market (it's the total opposite):

• Less chances to get ripped off (because the price you see is truly the lowest)
• Less possibilities to rip others off (because putting in a high price will get your offer bumped down by better offers)
• One (or a small group) can decide to try and buy out a single type of item and resell higher for a profit, just to create inflation (see this as a kind of monopoly over an item)

Now you have to keep some things in mind:

• With a local market, how easy or hard is it to carry goods from a local market to another market?
• With a local market, How easy or hard is it to know the prices of a remote local market?
• How easy or hard is it to produce goods?

About your concerns:

Backers argument that an global AH leads to a more regulated market, easier to use and a seller will reach a broader audience.

This is true (thanks to market transparency).

On the other hand critics say that this will make only really useful items get a massive increased price and common used items will drop their prices to their normal selling price.

This issue will rise if there is not way to produce useful items. This is due to the laws of the market: if there is an increase in the price, more producers will get on the market, and they'll all fight for the best price, which will make the price come down, until it reaches again a "stable" price.

So; what is better?

It all comes down to the implementation and the design.

EVE Online uses local markets but gives users ability to see the prices easily on other local markets via user-developed tools; in EO, you can "easily" produce goods that would net you a profit, you can travel "easily" to other local markets and you can carry stuff "easily" from a local market to another. IMHO, their implementation is GREAT!

Rappelz used to have local auction houses and local personal-store, but a high/infinite cost of producing goods, and a high cost of travelling from local market to local market. They eventually changed everything for a global market and it's been soo much of a plain reliever.

Answer 4

Like most things in game design, this comes down to game designer priorities and intentions.

The primary thing a global auction house does is eliminate the need to actually move goods. Therefore, the most interesting impact to game play by using localized auction houses to me is that it could be a way to facilitate a trading/merchant game as part of the overall game world. Imagine if you have an RPG with local trading houses. You also have localized resource clusters and travel requires time. You could create specialized upgrade paths for PCs to gain large-capacity cargo vehicles like caravans or ships. Maybe make other upgrade paths for different PCs that allow them to act like pirates or bandits. In this instance, you could have a dedicated game where certain players specialize in moving goods from one location to another, taking advantage of price differences.

On the other hand, if travel is nearly instantaneous (as it is in many MMORPGs for top level players), a global auction house would seem to make a lot more sense. As stated above, it would increase market transparency and let players spend less time buying and selling and more time on whatever you want them to be focused on.

It really boils down to what you want the game to be about and how much time you want players to be spending on the buying and selling aspect.