The Duopoly Analysis of Graphics Card Market

By analyzing the duopoly market of computer graphics cards, we categorized the effects of enterprise’s technological progress into two types, namely, cost reduction and product diversification. Our model proved that technological progress is the most effective means for enterprises in this industry to increase profits. Due to the technology-intensive nature of this industry, monopolistic enterprises face more intense competition compared with traditional manufacturing. Therefore, they have more motivation for technological innovation. Enterprises aiming at maximizing profits have incentives to reduce costs and achieve a higher degree of product differentiation through technological innovation.

💡 Research Summary

The paper models the global graphics‑card market as a duopoly, typically represented by the two dominant firms (e.g., NVIDIA and AMD). It introduces a technology level variable T that influences two distinct channels of profit enhancement: cost reduction and product differentiation. Cost reduction is captured by an exponential decay function C(T)=C₀·e^{‑αT}, reflecting how advances in process technology, design automation, and manufacturing yield lower unit costs. Product differentiation is modeled as D(T)=β·T, indicating that higher technology enables new architectural features (ray‑tracing cores, AI accelerators, etc.) that allow firms to charge a premium price P(D)=P₀+γ·D.

The profit of each firm i is expressed as π_i =