So as long as the franchise stays active, the game will be too expensive? Well, I guess that's the logic of the market.

Pretty much, yup. The demand for newer TES titles also raises demand for the older ones, which means people are willing to purchase them for more money. Gothic is, at this point, relatively obscure. I'm a massive TES fanboy so I will totally be that annoying bastard who will go "But Morrowind is totally worth 20 bucks!", but yes, objectively speaking, when compared to other conteporary games, it is too much.

To be fair, 20$ is still kind of a decent price for someone who has never played Morrowind before. But for someone like me, who already bought at full price both Morrowind and the GOTY back in the day (because no shop around here ever sold the expansions separately), well... they can just go Blizzard themselves. =)

Just re-installed Bloodlines. Last time I played it, WESP5's Unofficial Patch was at version 8.4, now it's 9.4.
Have you ever tried the Camarilla mod? I remember that I installed ti a couple of years ago, but don't remember if I liked it or not.

No, I didn't. I'm only using fixes from the said patch and plus-content from it. Nothing more.

Considering how easy it is to pirate GOG games, I'd think that someone would have dropped the price by now. If the price is rational, people will buy it. If it's not, people won't, and will acquire it some other way. No sense in having games this old at this price.

First of all, pirating games is illegal and unethical - just imagine, you create or make something, and someone else takes it away from you. And do you go into a fashion boutique (or a super market), and tell the owner, your stuff is too expensive, and if you don't lower the price, I'll take it without paying? That many do it, doesn't justify it.
And are you of the opinion that it's ok to break into a house when the door isn't locked? I wonder how you would react if someone took YOUR property - or do you think your property is yours, and the property of others is for you to take? I guess there are many people around who share your opinion, except that they apply it to their own property.
What price do you think would be "rational" for Morrowind? You can bet that, whatever non-zero figure you name, there will be someone shouting "too high".
It's perfectly legal and legitimate
- to voice the opinion that certain products, including computer games, are too expensive,
- not to buy them, or
- to buy them when they are cheaper (happens occasionally).
How about this? Or develop your own games.

It is a little high but it's also on sale regularly. I just bought a copy a week ago for $11.99.