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In every game that I've played or run, the players have been able to easily buy or craft any magic item that they could pay for. What are the pitfalls of this kind of unlimited magic freedom system? How does restricting magic item purchase change the nature of the game, either mechanics-wise or game feel-wise? What kind of games benefit from unlimited or restricted magic item purchases?

I'm mainly looking for an answer that applies to high fantasy, high magic kind of games like Eberron, Faerun, or Golarion, though I'm not necessarily looking for something 3.5/Pathfinder specific.

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It depends on the kind of restriction and how easy it is to bypass. What exactly were you thinking of doing - banning magic item purchases and construction altogether in favour of pure random drops? Removing all magic items from the campaign? Declaring that certain categories of items are only rarely for sale? –  GMJoe May 17 '12 at 5:32
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Pitfalls of unlimited magic item creation:

Well, under a system like Pathfinder that doesn't charge XP for magic item creation, unlimited creation coupled with a free magic item market where things can be sold for market value provides a very easy way to generate lots of cash. At the very least, it lets you increase party wealth massively over standard wealth by level. We tried removing XP costs from crafting in 3.5 once, and by about 9th level we had twice as much magic gear as we should've.

Then there's the verisimilitude issue. Who makes all this crap? Why did some wizard spend 200 days out of his life making just this perfect +4 keen vorpal kama, investing 100000 gp worth of materials into a product for which there is a terribly limited demand? Why didn't he hire a company of pikemen and set himself up as a wizard king of some significant region of countryside with that money instead? Effectively, as a player and a GM, unlimited magic item purchasing freedom breaks my suspension of disbelief unless some very fast talking is done on a very regular basis. Eberron is one place where I might buy it because of the volume of artificers and magewrights and whatnot; not familiar enough with the Realms or Golarion to pass judgment there.

Consequences of restriction

Really where restrictions hit hardest is saving throws. There are lots of buffs that boost to-hit and let you punch through DR as though your weapon were magical; the options for general saves are rather more limited. Coming out of a 13th-level campaign where there were no Cloaks of Resistance to be had, I can tell you that it's a sad day when the pitiful 0th-level Resistance is a staple buff of 13th level characters (that and Protection from Evil, if we knew what we were going up against). But it was absolutely clutch to have; we went up against a bodak around 9th level, and I was the only one who bothered putting up Resistance and drinking a potion of Bear's Endurance. I was also the only survivor. Bad saves scale much more slowly than monster save DCs, and Cloaks of Resistance save lives. So, by opting for non-purchasable magic items, you can increase campaign lethality significantly. This may be desirable.

Additionally, if you keep handing out gold, players will be at a loss for what to do with it all. Then they'll start bribing magistrates and hiring mercenaries and buying ships and building castles and otherwise using money to interact with the world in a manner other than "buy these things that make my numbers better". If these are behaviors you wish to encourage, then restricting magic item purchases will help you achieve this end.

Kinds of games which benefit from unlimited magic item availability

Arguably, adventure-path type games and similar plot-heavy railroads benefit from it. Games where you don't want PCs dying left and right, and where you don't really want PCs to go out of their way to interact with the world (because that would damage plot), and where you likewise don't particularly care about the economic ramifications of allowing infinite availability. Combat As Sport games, where you want their numbers to be juuust right for them to fight your lovingly crafted encounters and not die. If that's the type of game you play, then unlimited availability is a great idea. It keeps everybody happy, and you don't end up with that one guy with the +4 sword that you rolled on the treasure tables while everybody else has +1.

Despite this, I still prefer to play and run games with limited magic item availability. If someone wants a Holy Avenger, they better go find a library and figure out what dungeon they can find one in, because they don't just have a rack of 'em at the general store. This generates player-driven quests, which I find to be generally more fun than DM-driven quests (be it via NPCs or circumstances). Likewise, I like my games reasonably-lethal, sans fixed plot and with as much player involvement with the setting as I can muster. Making magic items freely available for purchase at market price stifles all of these things.

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"Why didn't he hire a company of pikemen and set himself up as a wizard king of some significant region of countryside with that money instead?" Well, the game rules do often make a handful of high-level characters with high-powered gear more effective than traditional armies. –  Alex P May 20 '12 at 23:13
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No, no, the pikemen are to hold the banners up. Traditional, you see. He's the army :P –  lorimer May 21 '12 at 0:32
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The pitfalls are the obvious ones: Usually the people at my tables who play M-U classes have been doing it for years and know exploits galore on how to get what they want and make what they want with their only limit being how much gold you give them.

While I don't believe that player abilities should be stifled, I believe they should face resistance from time to time. Make certain magical components rare or indigenous to certain areas so that they might have to make the "dime a dozen" magic item if they are trying to sell (or even slant the prices to buy them). Therefore if you're the DM I recommend disallowing certain product availability if the players having certain items would unhinge the balance of the game.

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You punish the non-casters, widening the gap between what they can do and what casters can do.

A wizard without scrolls or a sorcerer without runestaff can still do most of the things they usually do, while fighters, monks and other melee characters will miss much more often and die much more often.

D&D 3.5 (and therefore Pathfinder) are designed with ubiquitous magic items in mind. Magic items are part of a character build, melee chars need to be christmas trees in order to adequately hit level-appropriate enemies.

So...Don't do that. Allow players to purchase what they need for the character.

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Agreed. For truly unusual items that are likely to stick around for many levels, say that Holy Avenger that lorimer mentioned, then it might be good to have a quest. For more generic ones, I tend to assume that if the players have the gold they can either buy it or at least commission it so it will be waiting for them after the next adventure. –  TimothyAWiseman Dec 9 '13 at 23:17
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If you place severe restrictions on magic items, then one might say that you are no longer really playing a high fantasy setting.

I would echo Mala's comment that any severe restrictions of that sort could unbalance your game, frustrate your players, and ruin the fun. The comment "Don't do that. Allow players to purchase what they need for the character" is a valid solution. I offer another possible option as solution to your needs.

Instead of using a system that was predominately designed for use within a high fantasy setting, and then removing one of the hallmarks of that setting (common availability of magic); perhaps you should consider using a system designed for use with lower fantasy. Perhaps use a system designed specifically for a sword and sorcery setting.

Severe restrictions on the availability of magic is one of the hallmarks of a sword and sorcery campaign. It's expected. Such game systems are often balanced by the fact that magic for the PCs is rare, and magic for the antagonists often require either long ritualistic casting times, rare fragile items, or both.

My thought is that instead of forcing a low fantasy setting into a high fantasy system, why not use a system designed for low fantasy in the first place?

One of the campaigns I GM is sword and sorcery. I use a system specifically designed for it. We began the campaign on a whim in the interest of a temporary change of pace. We were to play it as a one-shot, only for a session or two. We would then return to our more traditional gaming. Instead I've now written over 20 adventures for the setting. It had become one of my group's dominate game of choice for many months thus far.

My personal recommendation is that if you are going to go low fantasy, go full out, all-the-way, and run an over-the-top sword and sorcery campaign. Base it on pulp stories like those of Robert E. Howard and Fritz Lieber. Howard invented sword and sorcery and Lieber named it. Also draw inspiration from the cheesy sword and sorcery films of the 1980s like the Conan, Beastmaster, and Deathstalker. Throw in a some of the Solomon Kane film from 2009 when you want things to get "Proper scary".

That is what our group did and it has been one of our most fun, exciting, and satisfying campaigns ever.

Best of luck to you in whatever you personally decide . :)

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What system do you use in that sword and sorcery campaign? –  DuckTapeal May 18 '12 at 0:14
    
Broadsword. It uses an extremely rules-lite system called "1PG". –  spidey May 18 '12 at 3:25
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