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because the cargo would be legal gifts between friends or strangers would still be possible.
That's why I wrote that dropping legal cargo should be possible in relative safety of the no fire zone of a station. Would probably be problematic because of the fines for dropping stuff and the limited amount of cargo that can be dropped close to a station (both things results of things players did to annoy other players).
The other idea would be, as I wrote, to put a timer on the cargo that would show the legal status of the cargo after x minutes (or on sale).
I agree it is a problem.
if black market prices are buffed, scale with your trade rank, and the limpets / hatch breaker are buffed the pirate would still be incentivised to use those tools over diplomacy but the option for negotiation would still be possible. A lot of pirates enjoy player interaction so that should still be an option.
For negotiations and diplomacy both sides have to be able to offer something and both sides have to need something from the other side.
„Drop cargo or die“ is not exactly bilateral diplomacy or negotiations.
A pirate would want to negotiate with the trader since dropping cargo would be much faster than using hatch breaker limpets.
The trader would have something to offer for the pirate - time, time the pirate needs to get out and avoid system security.
If dropped cargo is always legal the trader has noting to negotiate. It’s just the pirate making demands and threatening with the destruction of the trader ship.
In my scenario the pirate can use force if the trader isn’t cooperating. The pirate would get legal cargo with this method and maybe even more cargo. But it takes precious time, time that the pirate doesn’t have because the system security could show up to soon.
If pirate and trader negotiate the pirate gets stolen cargo, but the pirate gets the cargo fast. It’s saver for the pirate. The trader can negotiate how much the pirate gets and getting the advantage of losing less cargo.
If the trader isn’t cooperating the pirate can use force - still trying to keep the trader alive - or kill the trader to make a point.
If the pirate kills the trader the steep bounty would apply and with it all the bad consequences like no docking at station as things like that.
In that case the best method for the pirate would be to deal heavy damage the trader ship without blowing it up*.
Going back to risk and reward along with consistency, illegal cargo should be worth more if successfully stolen and sold.
I agree with you from a game mechanic point of view.
I disagree with you form a simulation point of view.
Stolen cargo is less valuable as it can’t be sold easily and everywhere.
This is where the economic simulation of this game fails. The difference between prices should be much bigger depending on the market.
A tiny outpost in a system with no water and no outdoor world would have a very high demand for food and water. Food should be more valuable than gold in this system - maybe a mining colony that mines gold.
In a high security system stolen cargo should be almost worthless as it’s much easier to get the commodities legally.
In a small anarchy system nobody cares about with maybe a single pirate outpost everything would be very valuable. They need everything as they don’t produce anything. Maybe only pirates are allowed to dock and sell stuff there - normal traders would get instantly robbed after docking.
That way stolen cargo could be of high value for a pirate.
(Sorry for going into dream mode

)
an interdiction would not constitute a police response, but an assault would and depending on the pirates "heat level" the scaled responce both in arrival time and strength would coincide with that. In what I'm proposing a bounty is a big deal and a pirate would want to avoid them in a policed system. However in anarchy, where the profits would be higher so would the risk and a trader could not count on the law or diplomacy to protect them.
Police should show up as soon as somebody opens fire.
Not sure about the police response after interdiction. Maybe not always adding risk for trader (police not showing up) and pirate (police showing up). How often the police shows up would depend on the security rating of the system.