If a sword +1 only has a value of ~1500 gp, why do mages ever make them? If making magic items doesn’t produce value for the spellcaster, why is there a functioning (and expensive) market in monster parts? Also, isn’t the cost of a magic sword 10,000–5000 in gold plus 5000 in monster parts? Sure, that gets halved to 5000, but why halve it again? Why would a mage ever buy monster parts to make into a magic item that’s worth less than the monster parts were?
I agree that magic item markets would be illiquid, full of information problems, and so forth. I’m not suggesting that you can walk into your local magic item shop and buy an off the rack sword +1. I’m also not suggesting that PCs can sell magic items that they find in a dungeon for top gold piece values. But if spellcasters regularly make magic items, enough to create a liquid market in monster parts, they must be doing that for a reason. When the Exarch Lazar’s vassal’s eldest child comes of age, and the Exarch decides to give a princely gift (partly to demonstrate his wealth and power, partly to secure the vassal’s loyalty, partly to secure the vassal’s child’s loyalty, partly because it’s socially expected), I would think that giving the young noble a magic sword would be a perfectly normal gift, bearing in mind that the Exarch’s realm gives him something like 1.4 million gold pieces in revenue per month. Actually, an exarch with a treasury of millions of gold pieces probably gives a much better gift to a relatively close associate than just a +1 sword, because a +1 sword doesn’t demonstrate much wealth and power, but let’s continue the example. So, where does the Exarch get that magic sword? One possibility is that he has a mage retainer make the sword, at a cost of 2500 gold plus 2500 gold in monster parts. That makes sense if Exarch Lazar values a magic sword at more than 5000 gold plus the mage retainer’s time. Of course, if there are scads of magic swords in the dungeons of Southern Argolle, then he might simply have an existing sword IDed to make sure it’s not cursed, and give that instead. So it only makes sense for him to have his vassal mage make a sword if the sword is worth at least 5000 gp–perhaps in part because he wants a magic item with a known provenance so that he can assure his vassal, “don’t worry, there aren’t any curses, this was custom made for your child.” And consider the mage’s perspective. A mage has to have a good reason for doing the work–otherwise, why buy all these monster parts and spend all of this gold?
I would expect that to produce a bifurcated market, much like the real-world market for cars. On the one hand, you have brand-new cars, which have a high cost, substantially higher than the costs of manufacture. The analogy to that is the made to order magic item market–if you go to the right wizard’s tower, and plunk down a large enough bag of gold, she’ll make you a magic item, but you’ll have to pay her for her time as well as the full cost of the components (i.e., 2500 gp for the gold cost, 2500 gp for the monster parts, plus compensation for her very valuable time). You’re going to end up spending a small fortune. There’s also a highly illiquid and messy market for used cars, which sell below their manufacture costs but have problems associated with them. And some of them may have clouded titles, because they were stolen or whatever. (This raises the question of whether there are doctrines like market overt, where magic items sold openly come with good title even if they were previously stolen, but that’s besides the point.) That’s the equivalent of selling a magic item you found in a dungeon. And those may sell at substantially below manufacture costs, at least if you need to sell it now (if you’re willing to do lots of merchantly legwork, you might get a higher price). But if the market for the second set of items is really depressed–if magic swords have an actual market value of something like 1500 gp, because you also need 1000 gp for the mechanic (I mean the mage) who IDs them, then it’s probably because characters don’t actually value magic items very highly. They’d much rather have the cash. And if that’s true, then the made-to-order market probably also doesn’t exist–you destroy value when you turn some cash and some nice ogre skulls into a worthless old magic sword. And mages probably don’t make magic items for their own purposes either, because they’d rather have the cash to hire a bigger army or something. But that implies that the whole monster parts economy collapses.
And what about the refurbished market? If I were a high level spellcaster who could sell a newly made magic sword for 10,000 gold or whatever, I bet that I could sell a pre-identified, guaranteed safe used magic sword for 8,000 gp. At that point, I’d certainly be willing to buy your used magic sword for 4000 gp or something, contingent on the identify process coming out okay, at least if I had plenty of ready cash. That’s like the factory certified, dealer sold used car market.
The traditional way to handle this in fantasy gaming is, I believe, tails I win, heads you lose. “You want to sell your magic sword? Oh, no one wants to buy a used magic sword… they’re not that valuable and it could be cursed. And even if you made it from scratch, they don’t trust you and won’t pay you even what you spent on making it. I guess you could get 1000 gp for it.” “Oh, you want to buy a magic sword? Well, they’re really valuable, and the people who have them don’t want to sell them. I guess you could get a high level mage to make you one, or pay a desperate noble a fortune for an existing one… but it will run you like 15000 gp.” In a sense, that works. It forces the PCs to adventure for wealth. It means that when they find a magic sword in the treasure hoard, it’s extra exciting, because they can’t buy it. And it means that magic items don’t get treated as another form of gold. But it doesn’t make a lot of sense. I believe that it’s directly contrary to the “the whole economic system makes sense” ethos of ACKS.
I think you should be explicit about your economic assumptions about magic items, but I think you should also check whether they hold together with the idea of markets in monster parts and making magic items as a core part of the spellcaster endgame.