It's a business with huge up-front capital expenses and typically very low margins. Supply is scaling up slowly because it's hard, and if you overshoot, you go out of business.

Nobody is "allowing" this. It's a natural property of being both advanced technology and a commodity at the same time.

The strange deals on the entire future output are what was allowed. Try to do the same thing with onions and the government understands you are a criminal.

https://en.wikipedia.org/wiki/Onion_Futures_Act

It has the makings of a natural monopoly, except its compounded by RAM cartels colluding to shut out the last of the competitors.

Recently they had a second price fixing lawsuit thrown out (in the US).

Now with the state of things I'm sure another lawsuit will arrive and be thrown out because the government will do anything to keep the AI bubble rolling and a price fixing suit will be a threat to national security, somehow. Obviously thats speculative and opinion but to be clear, people are allowing it. There are and more so were things that could be done.