Replace "normal/natural" with "idealized": yes, free market theory promises quite strongly that if there is a more efficient way to produce something, eventuall

Replace "normal/natural" with "idealized": yes, free market theory promises quite strongly that if there is a more efficient way to produce something, eventually some contender will discover that way and begin pushing out competition until that competition adapts. That mechanism does not require demand elasticity at all, it can work just fine in a perfectly inelastic market. Food is the closest thing we have to an inelastic market and it's certainly not a market characterized by lack of price competition caused by that absence of demand elasticity. Yes, expanding markets work different than stable or contacting markets. But that difference is that the expansion can gloss over certain failure modes. Yes, Intel might have occasionally pushed out a new Pentium generation if x86 had been the only CPU architecture in the world and AMD (and Cyrix) had not existed, because the demand for instructions per second rises with availability (this abstraction conveniently groups demand from replacement upgrades and demand from new use cases into a single bin). But that would have still been a broken market, even while the brokenness was temporarily hidden by demand elasticity/expansion. Model T wasn't the most efficient moment of car manufacturing, not if you include features in the equation. A car with the performance of the model T wouldn't sell today for a dollar beyond scrap value, and even Tatas and Dacias can e.g. be started without cranking and so on. The closest equivalent to a Model T would be a Tuktuk and those are cheaper today even before adjusting for a full century of inflation.