There might be a slight amount of volatility in the first week or so, but after that, the markets will stabilize at a price level slightly below previous levels.
Quote:
Edit: and the AH will collect fewer fees, so we'll all be a small bit richer
Lower transaction costs just means that sellers will be forced to price their goods lower to compete with other sellers. They will, however, achieve similar profits.
In effect, the buyer will be getting the better of the deal since price levels will decrease slightly, but sellers won't see any change in profit. In effect, Blizzard will be picking up the loss on this one (although not really, because they're not doing anything with the money, just taking it out of circulation).
Edit: Forgot to respond to your main point. Need more coffee, apparently.
Quote:
in 1-2 weeks, this temporary imbalance will disappear and prices will settle slightly higher than before because you haven't increase actual supply any but you have increased the exposure to buyers (effectively is "more demand")
Your intuition is backwards. You're not increasing the amount of demand in the market, but by allowing items to stay on the AH longer, there will be less instances of people forgetting to re-list things, and the amount of time that unsold items remain off the market will be greatly reduced. In essence, this will increase the quantity of goods supplied, which will lower prices and foster a greater equilibrium quantity demanded.
Edited, Oct 10th 2007 1:47pm by Demea