I've thought about this, but this also gives an advantage to high-volume sellers over newer ones and they already have alot of advantage. Assuming costs are equal, charging smaller vendors more will make them uncompetitive. I think we are saying the same thing here. By adjusting your prices to the rate supported by supply and demand (maintaining a minimum inventory), not all potential buyers will make a purchase, some will seek cheaper alternatives such as local face to face vendors. That's a good thing. As you mentioned below, expanding one's operation is not easy. That's what Pharmville is struggling with as we speak. So, until supply can catch up with demand, prices need to rise. Again, that's a good thing. It encourages new vendors to set up shop and current ones to expand their operations. You are absolutely right. There is only so much total inventory on Silk Road at any given moment and it has to be rationed in some way. That can either come through shortages and intermittent supply as you suggest, or through price rationing (there are other top-down rationing schemes governments use). The advantage of price rationing, besides there always being adequate inventory, is that it leads to a more mature and developed market with new sellers entering in to provide their wares. Over time, this leads to the low prices we were after in the first place due to competition, but has the benefit of more variety and quality, and the market is more robust. If one vendor leaves, there are others already in business that can pick up the slack (and raise their prices until new supply comes online). If I did, I did not mean to. See my acknowledging heroes thread. What these guys go through is epic! There's no catch. Vendors can see everything they need to make a decision about getting into the game. The only variable is the price customers are willing to pay for the items they are considering offering. In fact it is much harder to make a decision if you see low prices followed by no inventory rather than consistent higher prices. Is there a complete gap in the market and huge profit opportunity, or am I going to be undercut as soon as the other guy re-ups? We might need to do some term-definitions here. What do you mean by value? Value to the customer? I agree they excelled in this regard. I don't want to pick on Pharmville because it may not even be applicable to them, but what is the value to the customer of a vendor who goes out of business because they charged too little? Does a customer value a vendor they can count on to always have product, even if it is a little more expensive, over a vendor they might have to wait a week on, and then hope to get in the queue before they run out? And don't forget my all too important caveat: Maximizing profits is best for everyone "if fraud is not present". Much of the American business culture you mention is: Maximize profits "by any means necessary". Two very different guidelines. I hope you are wrong, both about the noobs and the long-term prospects of the site. So far, my convictions have been proven right. Thankfully, the profit / loss mechanism applies to Silk Road too, so as long as we continue to grow and are able to expand our infrastructure to keep pace, I'll assume the market is correct and we are on the right track. Thanks for the debate!