Originally by: Atrox Cruor

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It is often incorrectly assumed that a monopolist in EVE has free control over the pricing of the product and thus this would make him raise his price to astronomical levels. While this may seem tempting to him, he surely would not attempt this move. Why not? There are a few factors you have to consider.

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First of all, he will have to find the most profitable balance between the demand for his product, and the price. This is done by comparing the marginal income and marginal costs

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In normal markets where profit is a % of the total cost this is true, but when production cost is a fraction of the sale price, the cost issue is removed. The other difference is that T2 producers can produce a fixed number of items per time period. Even if the price goes up, they cannot increase supply.

IRL this isn't the case, you could increase supply even if it cost you twice as much per unit, provided you sold enough extra to make more profit.

Secondly, he must consider the risk of people running of to find substitute goods.

Works fine when you can say, use faction gear instead, or if you could modify T1 gear at some cost to be as good as T2... But when some of the T2 gear doesn't really have an alternative, and even that which does requires 'skills' which also don't restrict purchase of alternatives IRL.

Thirdly, he will have to consider stay-out pricing, which basically means his prices should be kept low enough as to discourage any potential competitors.

This works IRL, because monopolies typically paid for R&D or infrastructure, that their competitors can replicate, albeit @ a large cost. If they see that the R&D cost for an item can be reclaimed in 3 months profit, they'll jump on it.

Want an ISK Sink? Make R&D cost isk.... Make new T2 BPOs available for existing T2 items. At one stage there was talk of auctioning new BPOs. As the playerbase increases the number of BPOs should increase for each T2 item. These could be auctioned off with the isk being removed from the game.

Lastly, an organised group of demand can issue a tremendous amount of pressure on a monopolist. Think of everyone wanting an HAC uniting in some sort of union, boycotting the purchase of HACs altogether. This would devestate the current oligopoly.

In a non competitive environment this works, you could get a group (though doubtfully one this size), to not purchase a product. However since this game has such a PvP element to it, people will take advantage of others not buying, and use that to gain a competitive advantage.