Well the market is player driven, and certain mechanics influence player behavior. For example, players have limited market slots. So, it doesn’t make a lot sense for them to sell low volume items at reasonable prices in random backwood regions, as that market slot isn’t going to generate very much money for them. Thus, in order to increase profits, they can (1) sell that item in a busy trade hub in order maximize sell volume, (2) jack up the price, or (3) sell something else with a better margins and sell volumes.
On Jita prices:
Jita’s large customer base attracts a lot of industrialists. This results in plenty of supply, which puts downward pressure on prices. However, the industrialists who sell out of Jita don’t mind because they tend to have lower production costs and because they can make up for the slimmer margins with the greatly increased sell volume.
On Jita Item Availability:
Lots of items have low sell volumes. So, if you want to move your product in a reasonable time frame, you’d want to list it somewhere with a large customer base. And since people know Jita has the best item availability, they tend to go there when they need rarer stuff -which, of course, results in a positive feedback loop.
On price gouging:
Prices in market hubs can vary, but they tend to have enough competition to keep prices reasonable. All bets are off, however, once you start shopping at more remote stations. If there’s only one guy selling something, he can pretty much set his price. He just has to keep it low enough that most people don’t say, “F that, I’d rather make the trip to Dodixie or Jita.”
Anyway, I could go on, but hopefully you get the idea.