Idea:

I think it is extremely superficial to be able, once a tech is researched for example, to automatically purchase the same types of commodities throughout all cities in an Empire/Kingdom. More depth could be added by making shopping town specific. This would on the one hand force more adventure, as parties would be required to all go to a central location to purchase the best equipment and items, and on the other hand could easily be turned into another element of diplomacy. My thesis is that a city must follow a definitive path in its development of what specialty items it produces, and is unable to simply have for sale everything which technology at any point in time allows. This is not practical and takes away much needed realism and depth from Elemental

The first point is trivial. Most people should be able to see that this concept will make the world less 'small', i.e., give it a much more expansive feel and force players to make adequate supply decisions which are not currently available with the current one shop fits all approach. Whether this is a good or a bad thing is the question.

In regards to the second point, then, I believe that in order for this to be incorporated into the diplomatic game there must first exist a few conditions:

1) First, of course, town-specific shops. A general blacksmith leading to a choice between an armor-smith or weapon-smith within the city, for example, and with new technology then branching into an even more specialzed trade derived from the same path due to an extensive division of labor within the city. It is also possible somewhere along the line, most likely the civilization tree, to research a tech that may allow for two types of shop-paths to be followed in the city. However, I would encourage that there be put into place costs for doing this. The more market oriented a city becomes, the less of other general features it should have. This would have to be further discussed.

2) Second. Once the first concept is established, there would be a need for a greater diversity in shop types. I am talking about, for example, Jewelers, Tanners, Armorsmiths, Weaponsmiths, Magic shop, Clothiers, Herbalists, et.al.....These then branching into more technical specialties with a refined division of labor, such as the Jeweler then being able to be upgraded in either direction to specialize in rings, necklaces, etc., or the Weaponsmith turning into blades/blunt/piercing/ect. or the Magic Shop leading into Enchanted Items or Spell shops, or  whatever else have you.The possibilities are limited only by the imagination of the devs and the extent to which they want to itemize the world.

3) Third. Incorporate into the diplomatic core of the game an option or a feature, and perhaps the simple open borders agreement suffices, which determines whether or not foreign sovereigns and their populace are able to purchase goods at other Empire/Kingdom town shops. As production becomes more specialized and city specific, this opens up huge potential for the diplomatic option because not every Empire/Kingdom will possibly be able to self sufficiently produce the myriad items which a truly balanced army would need. For realism, if anyone cares about that, I would argue that the merchant/producers of the commodities of these shops, gold is gold. They care little if this gold is from foreigners or their sovereign.

4) Fourth. Limit the amount of specialized items that a shops within a city produces in a certain period of time, i.e., do not make items purchasable in infinite quantities. Make rarer items require special resources obtained through questing/notable locals - I would say through dungeon diving whenever/if ever that option becomes available. Make items require a certain production time as opposed to being instantly transferred to the player on exchange (I highly doubt that medieval merchants built huge stocks of inventory to meet unexpected waves of demand which they influenced through advertisement schemes). Perhaps harness the new dynamic created when open borders IMPLIES that other Kingdoms/Empires can shop at YOUR shops, and purchase items which YOU specialized, into some form of COST for maintaining open borders. As open borders stands now, it has very little costs/benefits associated with it.

5) Any other conditions you think I may have missed?

Ultimately, there may be added some type of intra-Kingdom or extra-Kingdom automatic exchange mechanism which allows for the distribution of items from one city to others. I believe that this possibility should be limited, however, and if implemented should come with a heavy fee. I believe this because the point of this concept is to create a sense of scarcity in the minds of players and in turn affect the general mechanics of the game-world. Whenever you do something, you do it with a definitive goal or end in mind. To do things which would work in the opposite direction at the same time is one, if not the, definition of madness.