Graphics card shortage - why don't they just raise prices? See e.g.

Nvidia CEO: GeForce RTX 3080 and 3090 Shortages To Last Until 2021 (Tom's Hardware, 2020-10-05)
The great graphics card shortage of 2020 (and 2021) (BBC, 2021-01-24)

Why don't Nvidia and retailers just raise the prices of these graphics cards (as might be predicted by Econ 101 supply-and-demand theory)?
Actually, just recently (a few days ago; January 2021 - for anyone reading this later), the major retailers of these graphics cards did raise their prices (see example here for EVGA). Or more broadly Forbes reports that at the beginning of this year due to shortages and in addition also due to increased tariffs on China graphics card prices:

are going up anywhere from 7 to 25%.

It’s difficult to know how much of that is due to the China tariff and how much due to shortage, but most sites reporting on this quote the shortage of GPUs due to increased demand from Bitcoin miners as one of the main reasons for price rise.
But the question still can be reformulated in another way. Why did it take them so long to adjust their prices?
I believe the answer to that is sticky prices. Research generally finds that in the EU and the US respectively data on the frequency of price changes (Alvarez, et al., 2006).

imply average price durations close to one year in the euro area and slightly above half a year in the US.

In addition, more recent studies for US show that there is also very large heterogeneity in price stickiness as about 1/5 of prices take more than a year to change (see discussion Klenow &amp; Malin 2010).
The average price durations above are not that far from the time it took graphics card prices to start to rise.
It is very difficult to know exactly what is the reason for price stickiness on a firm level, but research on price stickiness further shows that:

Firms usually don’t want to raise prices ahead of their competitors, hence in data we can observe a great degree of price change coordination among firms in the same industry (see Levy et al. 1998; Klenow &amp; Malin 2010).    This seems to fit the facts of this case as the big price increase followed the tariff news (but as mentioned above, observers seems to agree that tariff could not account for all the price increase), and thus firms likely reasoned that everyone will have to increase prices now, so now is the right time to increase their prices as well.
The above is also further corroborated by Eichenbaum et al. (2011) who show that price changes usually take place when firms costs change but that the change in costs itself is not sufficient to induce the change in price (similar findings were also found by Dias et al. 2011).

Firms will change prices less frequently when ‘menu’ costs are high. Anderson et al (2015) show that menu costs can easily reduce frequency of price changes by over 13 percent which is not trivial. I would not be surprised if it would be expensive to change pricing strategy of big multinational company such as Nvidia or AMD. Possibly some of the prices might be also locked by contracts with retailers.

When manufacturers use reference prices and recommended prices, which is usual strategy for many manufactures that want to ensure uniform pricing, the prices tend to be stickier than retail prices  (Klenow &amp; Malin, 2010 - although not all studies find this result). Indeed, in this case we can clearly see that retailers were rising prices ahead of manufacturers and especially scalpers were already taking advantage of the situation by reselling GPUs with higher prices much earlier (see news article on that here).

Empirical evidence shows that prices tend to be stickier when competition is less intense (Dias et al. 2011). GPU market is for all practical purposes a duopoly of Nvidia and AMD.

Empirical evidence also shows that goods with higher elasticity of demand adjust their prices more slowly, and this holds even in presence of demand shocks  (Dias et al. 2011). However, I could not find any empirical study on the elasticity of demand for GPUs so it is hard to know what role this plays in this case, but a priori I would expect GPU demand to be more price elastic since GPUs are not necessities and especially high-end GPUs could be considered a luxury good, and you can still play games with reasonably good graphics even on less powerful GPUs. Consequently, this could be a reason as well.

the evidence also shows that large firms are slower to adjust their prices (again see Dias et al. 2011). This also seems to fit the observable events. That is, as mentioned previously, scalpers adjusted their prices almost immediately, large retailers and manufacturers took their time.


This being said, as mentioned earlier, it is important to keep in mind that it is very hard to explain the behavior of few firms especially as the events unfold. There might further issues playing some role here. Possibly even a failure to act optimally perhaps due to some agency problems within the firms.