Originally posted by: ElFenix
Originally posted by: Rollo
You are correct that less supply is a component of higher pricing for the 7800GTX 512. I believe I am correct in that the X1800XT won't create enough demand at a price that is significantly higher than the 7800GTX 256, and the lack of demand at the higher price lead to increased supply and a downward shift in price.
well, no. you are correct that the GTX puts a soft ceiling on the price of the XT. when the GTX's price drops, the demand line for the XT shifts inward, making the market clearing price of the XT lower, ceteris paribus. but, if there isn't enough demand at a higher price there is actually too much quantity supplied, not too much supply. so then the price drops, and as the price drops the quantity supplied decreases until it equals the quantity demanded at the market clearing price point.
but, it's only a soft ceiling because ati could restrict supply, moving it inward, to keep the price up at the expense of quantity sold. that isn't often a profit-maximizing move in a market with large fixed costs (development), as there are large economies of scale to be had.
<--- BA economics, university of texas at austin, may 2001.
edit: and you're all off topic if you're not discussing the deal.