The news that a game is going to implement Microtransactions is almost always responded to by the ''hardcore'' gamer with vile responses. The general opinion seems to be that microtransactions are ruining games and pay2win is a phrase being thrown around alot, regarding this topic.

What I believe the problem with Microtransactions is, is the fact that in most cases It's a closed market In which there is a sole supplier, in this case the developer or publisher, who controls the price and has a virtually unlimited supply. And because the market is closed, the supplier can control the prices.

Now let's take a Free to play fantasy MMORPG powered by microtransactions. The items you'll find in the real money shop, are things such as an xp booster which lasts 12 hours, a cosmetic santa claus hat.

In most games the developer would have unlimited resources of those items, because they are the developer and are almighty.

But let's say you are playing this fictional fantasy MMORPG, and you've just killed a goblin commander, who has dropped an XP booster. Now you'll have three choices, you could either use it to boost your own XP, you could sell it to the shopkeeper, which ads it to the developers inventory. Or you could put in the real money auction house. Where you could make the choice to match the lowest price, or go under the lowest price.

And If enough people are getting XP boosters either through drops or through crafting. And they put them up on the real money auction house. the price will fluctuate. Thus creating competition for the developer and preventing a monopoly.

But what keeps the developer from magically creating a bunch of XP Boosters? Well, as you've read earlier, selling your item to the shopkeeper adds it to the developers inventory. Who then could decide it to sell it through the shopkeeper or he could put it up in the real money auction house.

This limits the supply of the XP booster because the developer can only sell the XP boosters they have aquired through shopkeepers, or bought on the real money auction house.

But Why would I sell my XP boosters to the shopkeeper when I can get real money for my items at the real money auction house? Well this is why our fictional fantasy RPG would require an exchange rate between the in game currency and the real world money credits. So in theory at one time It will be beneficial to sell your item to the shopkeeper. While at another time it will be more beneficial to sell in the real money auction house.

TLDR version: Players can get real money items through drops or crafting. And have the ability to sell them in the real money auction house or in the in game shops. This ads them to the developers inventory, which could then sell them through the shop or through the real money auction house. With an exchange rate between the in game currency and the real world credits. It'll be depended on the exchange rate where It'll be more rewarding to sell your items.

NOTE: I am by no means an economic, so If I have gotten some things wrong. Be sure to tell me in whichever way you like. Also If a game does this already please tell me.