Selling to vendors injects new money into the economy.
Selling to players removes money from the economy (through taxes, listing fees, etc.)
Selling to vendors removes items from the economy immediately.
Selling to players keeps items in the economy for the short term but most will eventually consumed.
It's better for the overall economy to sell to other players than vendors. It removes some of the money that the vendors inject into the economy or at least prevents the injection of "new" money, and it still results in the consumption of items.