Pipe Value vs Pipe Market Value

A pipe, as with many things, is only worth what someone will pay. It appears this particular seller does not need the money and will hold out until they find that someone.

Am I missing something?

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No, you're not. Supply and demand set the value. Granted, both can, and often are, manipulated in an attempt to extract some extra advantage. And a number of factors may play into demand other than supply, factors such as necessity for survival, social status, or emotional value to name a few. These factors may also play into the seller's thinking as well.
In this instance, the seller is convinced that his item is worth more than is being bid for it and he's not going to compromise. One of three things will happen. He'll sell the pipe at the price he thinks it's worth. He'll sell the pipe for less than he thinks it's worth. He won't sell the pipe.
At what point does market interest and willingness set value? I would say at the point where a deal either does, or doesn't, get made.
Many years ago I got into a bidding contest over a Barling companion set. A fair market value for the set at that time would have been around $900, possibly $1100, tops. Because the set had hallmarks for 1915, my father's birth year, I really wanted it. The other bidder was equally determined. At $3000 I dropped out because I didn't want the set at any price, and my competitor evidently did. Besides, my father would have looked at me like I was crazy, so what was the point. The set was worth more to me because of a personal connection - my father's birth year. It was certainly not simple supply and demand.
The seller may also have some emotional attachment to the object. Or, he just may be stubborn and/or greedy. There are always more pipes.
Though I haven't seen another Barling from 1915...

You understand market value well enough. But just like sablebrush described with buyers, sellers' valuation of items may also diverge from the fair market price. They may personally like the item enough to value it over the market rate and not have any pressing financial need to settle for a lower price. It's just sablebrush's example reversed.

"A pipe, as with many things, is only worth what someone will pay."
+100 peteguy!

Valuing pipes is a funny old business. I can only comment on old meerschaum pipes but even that market has a pretty wide and diverse pricing structure. I have seen well colored billiards sell for $300 and similar examples get knocked down for $40 with a half way decent case. There is no hard and fast rule for these things although in the 'cutty' end of the market I seem to be hitting into buyers competing for pipes that I am interested in that barely got a bid in the past. I can understand the Dunhill's and the like going for crazy money but some of the dross I see out there just fills me with amazement. I am even more amazed at some of the prices paid for unopened tins of tobacco from yesteryear which were not great when you could buy them for thirty bob at your local newsagent and I am sure the passage of thirty years hasn't improved matters too much.

Lots of good and interesting points being made here.
One issue that individual sellers don't take into account is that they're not a business and that I'm taking a decided risk in bidding on their listing. With a dealer, if the pipe turns out to be defective, the dealer will make good on the sale. That's the risk that a dealer takes, and it's reflected in the overall pricing of stock. An individual doesn't have to do that as he's not doing this as a consistent business. What this translates to, for me, is that I'm not going to ever pay top dollar to an individual because there is a very real element of "unknown" to any eBay transaction. So if I don't win in a given auction, I really don't care.
Those listings that repeat for years on end, like Mr Can's, without a sale, are good indicators of the upper eBay limit. And, Mr. Can isn't doing this as a business, so he can relist for eternity. Dealers need to move product and stay aware of market levels or they're soon out of business.
eBay is not the world, by a long shot. There are eBay dealers and online dealers who price based on their research and experience, as Michael has stated, B&M's a cross the country, pipe shows, and there is another market between collectors that never sees the light of day, where the really rare stuff gets traded.
There is a level of subjectivity regarding evaluation in all of these markets. To believe otherwise is naive. I've seen very reasonable values and completely loopy ones in all of them. And what seems reasonable to me may be entirely loopy to someone else,as well as vice versa.
Supply and demand are the basics for all markets. But the factors that affect supply and demand are variable and not always logical or objective. Condor's reference to the growing fad for ancient tobacco is another reminder of the effect of romance on the pipe market. That tin may have been crap 40 years ago. Now it's dried and faded over the hill crap, and you've just spent 50 times its original market price.
Caveat emptor everywhere.

I think that when a person starts to sell their collection, there is an emotional attachment that clouds the ability to be realistic about value. They price a pipe at what they feel it should sell for. Not what the market dictates.
A person who is simply selling pipes to make money and sets crazy high prices is just being greedy.
I've been messing around with set price auctions myself. If a pipe doesn't sell or at least have a number of watchers in a couple weeks, I drop the price. If the pipe still doesn't sell or draw watchers, I'll either send it to auction and take my chances or, if I have an attachment to the pipe, I'll simply put it back on the shelf.

Several Nobel Prizes in Economics have been awarded to economists who have worked to divulge the

crossroads between the economy and human psychology and sociology. What makes people, individually

and in groups, spend or not spend, value products or services or not, and so forth. It's rational only to a

point. Most people think they are entirely rational about it, although any second party can see they are not.

I was reading this thinking, "who's mr. can?" I look at a fair amount of ebay auctions and didn't know who it was. But I went on ebay and found him. He's the collage guy. His buyouts are pretty redonkulous, but he does get some interesting pieces.
Good luck on your hunt!