Do LCD manufacturers shape the market?

We just happened across some interesting comments on the LCD manufacturing market from iSuppli, a market research firm. Via EETimes, iSuppli indicates that the average prices of 40- and 42-inch LCD panels has dropped to around $1,000. This is the cost of the panel that the LCD television manufacturer pays, so don't get too excited.

Even more interesting is the obeservation that the flat-panel producers are investing in plant capital that produces LCD panels in a range of 23-inches to 42-inches. Sounds like we can expect prices on sets these sizes to decrease faster than on LCD sets larger than 42-inches.

It's Economics 101: as prices drop for LCD TVs in this size range, they are more likely to be purchased over the higher-priced larger sets. Will this lead to less demand for larger LCD's, spurring a vicious cycle? Funny how the market works, isn't it? At least this holiday season will likely be a good one for LCDs; for those 42-inches or less, that is.