The part you appear to be missing is the customer's role in the transaction. I can vote with my dollars. If you do not meet my expectations I do not go back. Let me give you an example. I buy moderately priced books from a company in England. Over the last two years I have purchased roughly 25 books at an average price of $60. The last book I purchased was a very slim volume. I believe they charged me too much given the subject and the slimness of the volume. I decided I shall no longer do business with them because of my one "bad" experience. I am voting with my dollars.
Unfortunately your view of how the market works does not include the customers. Therefore you do not understand the free market.