Then when they jack up prices, it creates an incentive for new companies to enter that field and make the same item for less.
A better question might be: what hinders this process today? Capital disparity plays a role (a wealthy company can perhaps make a competitor a buyout offer they can't refuse, or temporarily lower prices to try to kill them), but another major cause is excess regulation and the weaponization of intellectual property.
What hinders the process is that the people holding the capital are the same ones that benefit from the new competition.
So they sell the stock of the company that is wringing out excess profits just as they are putting money into the “disruptor” that is going to capture all the consumers leaving company #1.
Now ensure that you push for a decade of overleveraged growth and regulatory capture (ensuring you don’t get diluted the same as the founders) and now you have shares of an entrenched quasi-monopoly - your task again now is to demand margin increases and stock buybacks in order to exit your position and buy your name on the local college library.
Wash rinse repeat all while taking money/risk off the table personally each round so when it collapses finally and the companies are finally ground into dust, you and your family have long exited and are onto the next thing.
I don't think you answered the question. Your story depends on competition Rising and companies falling. It doesn't explain why markets are winner take all or why competition is slow to rise.
For example, if Amazon has a monopoly, why haven't capitalist profiteers bled it dry yet,
A better question might be: what hinders this process today? Capital disparity plays a role (a wealthy company can perhaps make a competitor a buyout offer they can't refuse, or temporarily lower prices to try to kill them), but another major cause is excess regulation and the weaponization of intellectual property.