UO's economy was an interesting one. Initially they had a set number of gold coins in the world (based on the number of players, I believe), and that was it. While I can see what they were intending, what happened was that a few players hoarded the lion's share of the gold, and everyone else was left with slaying dragons who then dropped a gold coin or two, and trying to sell other valuables to NPC vendors for.. zero money.
So they scrapped that, and put in a "Gold gets created when you kill a monster or sell something, sorta" approach. The NPC vendors bought and sold various things, with your Smith vendors usually only being interested in blacksmithing supplies and weapons OR armor, not both weapons and armor. Tailors bought wool, cloth and clothing, carpenters bought cabinets and such.. you get the idea. If you had a pack full of miscellaneous gear, you had to travel around to sell it all.
NPC vendors always sold Normal gear. Wasn't below average, wasn't above average, was middle of the road. As a result, a starting smith/carpenter/tailor/whatever did their best if they just sold their crap to the NPCs. It wouldn't be cost effective for a player Smith to sell a dagger to a player for 10 gold when the NPC will buy it for 50. Sure, a player will buy an exceptional dagger for 100 when the NPC will only buy it for 75 (and turn around and sell it for 125) but you had to have a respectable level of Blacksmithing to make exceptional gear.
(This is how everything ties into everything else. UO did not use classes, it used Skills. You had.. I forget, 25ish skills in the game, but only 700 points maximum. So you could get 7 skills to 100 and be awesome at it.. and absolutely suck at everything else. In theory, you could get a bunch to something like 75 and have an extra skill or two... but skills were really only starting to get useful at 75. From 0-75 you were just doing what you could to get it up to 75 so you could actually do something with it. There were also skill synergies.. like a high Carpentry and Tinkering skill would let you build chests that locked. Anyway, point being, a Blacksmith was shooting for 100 Blacksmithing, 100 Mining (To get the rare ores and not have to buy them all the time), probably a high if not 100 Arms Lore (it added a bonus to Smithing, I think), and a 70ish Magery (To use the OH SHIT RECALL escape reliably and to use Mark scrolls) - which left a couple of points for some fighting skills (Say, Maces, Tactics and Parry at 100).
So, while you could get shit good enough to keep you alive against Lizardmen and Ratmen and some of the lower level orcs from NPCs, for the good shit you had to buy from Players.
Now.. remember one very important thing - UO was the Hollywood Inner City of MMOs. By that I mean, if you left the protection of town without 100% preparation, in about ten seconds there's going to be someone laughing over your corpse as they loot your body. Hell, IN town people would do all sorts of nasty tricks to get you killed, assuming they didn't just pick your pocket right there. You had to pay attention at all times to what everyone else was doing around you.
And there were scams. So many scams. I just bring that up as a way of segueing in to the Player-Run Vendors, because it does apply.
Now, to have a Vendor you either needed to own a house or have a friend who did. Back when I played they were moving away from physical key based identification (No, really - if you lost the key, you lost the house. My friends and I lost a tower that way) because players were.. understandably, I guess.. tired of finding a place to put a castle or something, putting it down and a day later being killed, losing the keyring, the killer either taking over the house or.. more likely.. it simply falling apart with no one there to keep it up (Housing upkeep - if a keyholder didn't open and shut the front door at least once every 7 days, the house would fall down and the contents would spew out on the countryside)
So, assuming you have a house, you'd go buy a Vendor Deed from a town's shop or another player's vendor if you couldn't go into town (In the in-game Karma system, some players murdered so much that they were forbidden from entering a guard zone. Or, rather, if they did and a guard was called, they'd be killed instantly) and then use it inside your residence or on the front steps. This creates an NPC that you can use like your inventory containers, except when you put anything inside it, you either assigned a price or had one auto-assign. The Auto-assigns were always well below actual market value, by the way. At least on Lake S they were (Lake Superior being the server I played on). Anywho, you would then fill up the NPC with whatever items you wanted to sell, and the prices you wanted for them.
What controlled the economy? The same things that control a free-market economy now, I guess. If you priced shit too high, no one would buy it. If you priced it too low, you'd often sell out too quickly (because Bob would roll up with the intention of buying one (1) exceptional Sword, but when he saw you had twenty for 70% of the regular price? He'd buy 20.) which meant that either you'd have to live your life crafting/gathering crap for your shop OR you wouldn't.. and people would actually stop visiting because you're always sold out of stuff. Because Bob buys you out at once because your shit is so cheap, but Bob only comes once a week.. so selling at 70% of market value means you're making less money overall than if you sold at market. Kinda crazy how that works, but there you are.
Anyway, the NPC vendor charged you daily, and there were 12 days in one real world day. The way this worked was you'd drop money on the NPC to pay them up for a while, and if they ran out of money they'd start taking money from your profits (which is fine) until THAT ran out.. and when it did, they'd wait for a bit, then leave, dropping your stuff on the ground. Which meant it had about a five minute lifespan - not because server cleanup would delete it, but because other people would swoop down on it and take it. However, initially the Vendor price was.. I forget what it was, but I think it worked out to 250 gold every 24 hours. Reasonable. Origin found out that people were using Vendors basically as extra storage space - put an item on the Vendor, put a cost of 12,000,000 gold, no one will buy it because it's only worth 1000. Pick it up later. Origin put in rules that.. frankly, I don't recall, but the gist of it was that the NPC vendor would charge you a rate based on the total value of the items it was holding, so a few million dollar items would have the NPC charging several thousand gold a real-world day. Unworkable for most people.
Now, that being said.. I couldn't actually tell you what the Value for an Exceptional Longsword is. No one could. Over near Vesper, right outside of town? 200 gold. Out in the wilds right by the entrance to Shame? 250 (If you came to a dungeon unprepared, you were going to pay
. One way or another). Out in the middle of fucking nowhere? 150. In a player-run town? 175. Big John's Discount Mall (located between Britain and Skara Brae)? 165. So what's the market value? It all depended mostly on what sort of traffic you had or you could generate. Big John's Discount Mall, for example, would have 20 vendors inside it, usually run by a Guild. The houses around it though? Independent of that guild, but if they could put out wares that people wanted too, while people would mark their runes Big John or something like that, they might not even set foot in Big John's anymore, as Steve's Poisons a screen over has all the niche stuff they need (for sneaky fencing poisoners), while Big John caters to the average playerbase (Halberd wielding mages). And, luckily for Steve's Poisons, Big John's had a vendor selling runes directly to Big John's front door, so lots of people would buy those and have it as a shopping destination.
That's the player economy. It doesn't affect the NPC economy at all.
This is all without discussing the big problem of housing. Buying a house deed? Not too bad. Finding a place to put the fucking thing? Damn near impossible. Looking at the map
..see all the light green areas that represent plains? Yeah.. if I showed you a real map, those areas would have housing denser than any town. There were some areas that it was damn near impossible to walk through because the houses were so tight.. hell, at the start houses could touch each other. One guild had a group of houses completely encircling an area, creating a courtyard. They put a stop to that as people were using houses to completely block off dungeons. Anyway, point being that I started the game about six months after release. At that time, a place to put the smallest house possible was almost impossible to find. Castles? There was no space. The only way to place one was to find the area you wanted and convince everyone there to move out so you could wait for their houses to fall apart, camp the area and keep others from building there, and finally putting a castle down.
Now, NPC in-town Vendors? Let's say one had 100 black pearls (A reagent for spellcasting, Black Pearls being used in basically goddamn everything) at 6 gold each. Completely reasonable. Now let's say Steve buys 50 of them. The NPC is now selling 50 black pearls at... 8 gold each. John buys 40 of them. Those remaining 10 black pearls? 12 gold each. This also worked the other way. Selling Fancy Shirts to NPCs started at 75 gold each, but quickly dropped to 20-25 gold before they flat out refused to buy any more. (While you could buy as much as you wanted in one go, you could only sell five items at a time.) NPC vendors also had a gold amount you could see, and when that hit Zero they stopped buying things as they could no longer afford it.
Initially, an NPC's inventory was it's inventory and that was that, outside of the NPC dying. While the plan from Origin was that players would wander the wilds and collect the randomly spawning black pearls (which people did, don't get me wrong) and then sell them to the NPCs (Who the fuck would do that? Reagents are USEFUL!). Even the crappy reagents used for a handful of spells no one used anyway? No one would sell them because it was more useful to keep them around or sell them on your NPC vendor in Reagent Grab-Bags (People often sold bags with reagents inside, usually in 10, 50, 100, 250 and 500 of each increments for a stupid amount of money). So players often ended up dropping all their supplies off at a bank, killing the NPC in one hit (and dying in the process), reviving at the healers and by the time they made it to the shop, a new vendor had spawned with an all new inventory....
Anyway, Origin pretty quickly changed that to Normalizing every 2 hours. Inventory would reset to Default, as would the wallet. Granted, this resulted in people timing it and teleporting from town to town to sell things in one go, thus locking the vendor from buying Fancy Shirts for another two hours, but it was a workable problem.
So, to summarize..
Origin started by trying to replicate an economy with limited monetary resources, quickly scrapped it in favor of an artificial one where money is apparently created in Ratmen digestive systems.
Player-run-Vendors required housing. Housing was not fully thought through, and by the time I left they still had no working solution. I don't think they do now either.
Player Economy was where it was at. Tangibles were better than Deeds - that is, a placed small house (7x7, 5x5 usable interior) was worth at least ten times it's deed value, and that's assuming it's in the ass-end of nowhere with nothing useful nearby.
The main thing keeping Magical and Player Made Exceptional items as low as they were (and we're talking usually 10x normal NPC cost for Exceptional items, Magic items had their own scales based on what enchantments it had, with the highest level ones on a good weapon costing about the same as a placed castle) was that on death, you lost your items. All of them. Or, rather, they stayed with your corpse. Your spirit had to run off and find a healer, then run back and hope they haven't made jerky of your body yet. So losing items "forever" was.. common. You learned to not get attached to shit, and to always
bring your A game when you left a safe area - and to never consider any area as Completely Safe.