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Originally Posted by hellsoap
the obvious course of action here is to agree to sell at that price with him, then buy all of his and ramp up the prices
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Bingo.
Marginal revenue and marginal cost don't really exist in WoW except as a function of time, which is itself unit elastic and can't be moldable. In other words, you play to have fun and market supply is created as a byproduct of that. The unit to unit curve is not something that has measurable opportunity cost available to it and is instead variable on outside factors independent of the market (free time, saturation, real life obligations). Thus since for common goods on the AH all firms (players) are operating under perfect competition (no product differentiation, no barriers to entry) at monopoly levels of market equilibrium with no deadweight loss(D=ATC), firms in collusion have no incentive to not cheat given that they all earn short-term economic profit and have thus have capitol to claim market share from firms who do abide by the agreement.
It's a completely hilarious form of market structure.
As an aside, if I could graph the Nash equilibrium for a prisoner's dilemma in WoW I think my life would be complete.