The economy is entirely in the hands of the players, both the buyers and the sellers. Merchanting works because the economy is small enough for a single demand to be worth a price increase. If someone desperately wants an item, he'll usually want to overpay for it. Instead of trying to sell for a more normal price, the general merching approach is to always sell at the price someone desperate will but it for.
Why sell it for less if you can sell it for more?
It's pixel-hungry and greedy, sure. But we're forgetting most humans are greedy by nature. It's the entire greed for more money, or certain items that creates the changes in a price. Merchers are far from the scrum of the earth, they're usually working towards some goal just like you are.
Some people feel rather unlucky with pvm, or are in general bored of skilling, so they merch. At the end of the day, it's still the buyer's choice at what price they buy stuff, though supply is often lower the lower the price. In the end people would much rather overpay for something they want than spend all eternity trying to buy it, and that's okay.
G.E. won't change much to merching or the economy. We'll just have both larger supply and larger demand, due to people being able to put in orders and leave them. I suspect most things will stay the same. There will still be merching, there will still be people desperate for items and there will still be overpricing. Long story short; don't buy it if you think it isn't worth the money.
/rant