"In the long run we are all dead" -John Keynes
My undergrad degree was in economics so I can speak to this somewhat.
I completely agree with you about the supply and demand equilibrium... in theory or on a long enough time frame. But observations on actual item prices has shown that certain "high demand" items constantly defy the expected effect of an ever increasing supply.
A couple of points... "production" (people farming said item) is based on the selling price of an item, so that finds a quick natural equilibrium. People aren't out farming Scepter's of Rahotep, just because there's a low supply of them.
Additionally, a lot of items are illiquid, so they end up sitting on alts and never being sold.
Compare the price of a FBSS pre-kunark to now, or a Fungii 6 months ago to now. Demand shocks on p99 clearly have an asymmetric effect on prices rising vs. falling, just like markets in real life (except in reverse).
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