CompuServe Messages

Brian, I don't doubt that the demand for more memory will increase, but that only pressures prices upward if production is unable or unwilling to keep up with demand. Generally, if the demand for a product is growing and is expected to continue growing, then producers increase output to service that demand. If supply continues to grow along with demand, then relative price doesn't have to increase. Furthermore, increased production of a product for which the major capital investment is already in place usually brings about a decrease in average unit cost, thus, price doesn't need to rise in order to maintain or improve profit margins. That is the theoretical basis. Of course manufacturers may feel that the demand is not price elastic, meaning that increased prices results in a decrease in demand at some price point. If manufacturers see an inelastic demand (demand doesn't decline regardless of price) then they have little motivation to reduce price. This condition is sort of like that of a natural monopoly. So, whether ram prices stay where they are or rise is more likely determined by these conditions. It would appear that ram prices are not, presently, very elastic. But if manufacturers are continuing to invest in increased production, ram prices may still decline somewhat in the future. The key word, here, is "may".