Guide Item Flipping! A New Practice For Profit!

Yeah but taxes don’t affect demand. The seller always loses profit when taxes are introduced (taxes are one of the determinants of the supply curve). For example, let’s say that you do buy for 42 granite for 13 and decide to sell for 16 for a 3 emerald profit per quantity without the tax. Now let’s say a 5% tax is introduced. Give or take about 33 of those emeralds of your total profit is now lost. To account for this lost in profit, you raise the price to 17 emeralds a piece. Well now you’re selling above or at the market price and aren’t even garunteed to make any money now as your demand has significantly decreased. Relastically speaking obviously the market price (call this the equilibrium point) moves up when there’s a tax (because the supply curve shifts) so this situation isn’t completely accurate, but generally the trend is that when a tax is introduced, it hurts everyone most especially the supplier.

Economics is very fun and interesting. If you’re given the opportunity you should definitely take it as a course.

 

yes but if the buyer pays 5% tax, then resells for more, then a new buyer buys the resold items with the 5% tax, then tax doesn't really affect right? you'd still be profiting

 

The person flipping would profit, but in the long-run this is a money sink and therefore not sustainable - everyone is just going to lose money.

 

How would people not profit after a while?

 

They would lose money relative to if their wasn't a tax (which, in economics, is all that matters). Even the people that do profit would have gotten more without the tax.

 

Yeah they’d obviously make more money if there wasn’t a tax, by they can still make money will a tax

 

That's true, but that's not what's contested. It doesn't matter whether the tax is added to the seller or the buyer - if it's the same tax, it's going to have the same effect.

 

Technically yes, but there's a cap at how much you can sell more for which is determined by laws of supply and demand. Plus, in the situation I defined above, you still are earning profit just not as much profit. This is always the case of taxes in short run.

Generally, price flipping is impossible in long run economics since everyone's looking to make a profit and willing to undercut each other. However since the ingame market is still fairly new, prices haven't settled, and not everyone has the knowledge/know how to price flip, then in this short run its very profitable. Just that introducing a tax hurts the amount of profit you can earn.

Now the effect of taxes in long run econ is very different (its actually damaging). Anyone with experience with the steam market and trading skins using the community market would know that the tax Valve levies makes it very hard to earn profit there

 

I've made over a stack in the past day from just undercutting :^)
Not including any Mythics. Just Unidentified Legendaries and Ingredients mostly. Some Powders thrown in. Takes less time to sell if you undercut :p

(I only take time to flip if it's very profitable. If you buy something and try to flip it, but it's not in high demand or never sells, you just lost money)

 

Undercutting is a counter to flipping, which balances the market pretty well