You start off your post with a contradiction. The first two sentences.
"Profits won’t increase from raising prices because it decreases demand. There is a sweet spot where profits are maximized."
"Inelastic demand" is an economist's euphemism for "People will die if they can't afford the price, so fuck 'em."
That wonderful "competition" you mention is the way the system is SUPPOSED to work, except businessmen do everything they can to get around it: collusion, cartel, monopoly, government intervention to protect their market, outmaneuvering their competitors by temporarily selling at a loss till they fold, and active lobbying of politicians so its all up front and legal.
The system is intrinsically crooked. And they can control supply AND demand by advertising, controlling supply chains, blackmailing or bribing middlemen, or even by buying out competitors. Its called MARKETING, hell they give out college degrees in how to do it. Its not because of a few "bad apples", or an occasional anomaly. Its a racket designed to be crooked, unless regulated by government. Greed is built in to the system.
Quit making excuses for these guys, Buck, they're no damned good.
I'll grant you, under ideal conditions the free market works great, but eventually one, or a few, producers accumulate enough power to either drive competitors out of business, or to join up with them to fix prices. Its inevitable, the incentive to cheat is ubiquitous, and inescapable. Its not a bug, its a feature. If you're really looking for an Invisible Hand, that's it: a mailed fist.
Read Adam Smith. He understood this.