First off I want to say I'm posting this here as well as in the Suggestions Forum because I want to ignite a spark that will begin with the players and end with the game-makers after something is changed. That being said it is imperative that players first, blizzard second, understand my message.
Free Market doesn't work. Plain and simple. You put an auction house up with a set of simple rules and mechanics that allow it to work, which allows players to post items for sale. And then the developers walk away. Hoping their creation works and everyone is happy. Unfortunately this is not the case. This system only works when everyone plays nice and doesn't price gouge, or try to monopolize the economy.
However as we all know this isn't the case. Left to our own devices it's only a matter of time before one player or another opens the pandora's box and buys out everything they can and resells it for what they consider a more appropriate price. Then monkey see monkey do, someone else comes along and dose the same thing. Before you know it there are a group of people all sitting around waiting for one of the others to let up the slack on their monopoly so they can pick it back up.
After this you can say goodbye to "free" economy cause now it's no longer free but being controlled by a few greedy players. The sad thing is this number of players doing the controlling is only going to grow as others follow suit.
Allowing this to continue as it is now makes many honest players seriously consider buying gold from outside sources, Which encourages more gold farming, which encourages people to find exploits in the game, which encourages hacking, and it goes on and on further down the twisting spiral.
So my suggestion is that Free market be done away with. Before this goes any further, it may already be too late. But adding a few key restrictions could end this all. Limiting the number of auctions any one player account can set up would be a step in the right direction. Another would be putting max price caps on item's by level, for instance no item under level 20 lets say should be more than 20 gold. level 20-30 No item can be over 40 gold, etc. This still gives players plenty of leeway to set prices for items that are fair while adding a safety net in place to keep things fair and square.