Imagine you bought a Ferrari for $200.000 a few months ago. Now there's a new Porsche on the market - and Ferrari decides to suddenly lower their prices by 25%. Very bad decision as
(a) it's basically like admitting that the Ferrari is inferior to the new Porsche and can't compete at the "old" price.
(b) people who bought the Ferrari at the original price will feel screwed over - a lot of unhappy customers right there.
(c) observers might deduce that it's not worth buying a new Ferrari at all - as fragile price stability basically destroys the feeling of "value" attached to a purchase.
(d) Peope interested in buying a new Ferrari in the future won't buy one right after market introduction anymore - but instead wait for a price cut. Results in a general slowdown of sales.
Only PC tech-fetishists that for some reason base their self esteem on their PC purchases can be anywhere close to such reasoning concerning graphics cards. And they would have to be immature on top of that.
I'd assume that the overwhelming majority of buyers make their purchase decisions based on percieved value. If you're a tech enthusiast who buy for gadget appeal, you'll question why the HD7870, using similar PCB and other components as the HD6870 costs twice as much. That would imply that AMD at least charges four times as much for the actual, same size GPU. If that is due to disastrous yields, then time will fix that. If it is due to wanting to increase their margins however, those who count themselves as technological cogniscenti will balk at paying a huge marginal increase in money for a small marginal increase in capabilities, mostly achieved by switching lithographic process. They're getting fleeced, and know it.
Tech enthusiasts is one target group, the other being PC game players. These are the ones who uppgrade because the game(s) they want to play start to run uncomfortably slow, either because new game code is more demanding or because they changed display to something bigger, making limited rendering resolution more apparent. When faced with their purchase options, they can either pay up or decide that they'll play other games, switch to console gaming, or simply conclude that PC gaming isn't for them and spend their time and money elsewhere.
No matter which category you're looking at, higher prices reduces your total customer base. It may or may not be profitable anyway, short term. Depends on just how much sales drop. Long term, reducing your customer base is a bad move, but given the outlook for discrete GPUs, the short term may be all that counts.
From a personal perspective, I find the HD7 range to be quite attractive products. However, in the last month I've blown $2500 on man-toys (ensuring some future restraint...) but no graphics card, in spite of always having bought at least one or two per process generation in the past.
The value simply isn't there.