And depending on the industry, there might not be much more to be gained by scaling up. Going from 45% to 60% of the market might not be more profitable than an extra few percent per unit.
We usually expect that competitors would try to compete, and going from 5% to 10% market share would result in getting undercut so badly that you lose far more customers than the higher margins are worth. It's not so easy to hand-wave the reasons why that hasn't happened here.
Multilateral increase in margins demonstrates a lack of competitiveness between competitors.
This isn't really a matter of competition, it's that people's willingness to pay (in nominal value) is much higher.
If people's willingness to pay were less, then increasing prices would loose a greater portion of the market.
It's also has an impact on what products get made, and investment in r&d. If you fall behind the competition in terms of quality, you loose marketshare.