Plenty of exceptions to that – broadly speaking, oligopolies, but generally anywhere with low competition like the only convenience store in a locality, rural broadband, etc.
There is no perfect competition, supply doesn't perfectly meet demand, and incentives aren't always perfectly aligned ¯\_(ツ)_/¯
In any case, government services change through policy and, thus, indirectly, through the electorate. But a) it lags, b) is not the only issue the electorate care about, c) the supply of money is not infinite, d) the supply of labour is not fungible and e) in this specific case, policy on immigration is generally driven by people not immigrating, so the incentives are not aligned.
There is no perfect competition, supply doesn't perfectly meet demand, and incentives aren't always perfectly aligned ¯\_(ツ)_/¯
In any case, government services change through policy and, thus, indirectly, through the electorate. But a) it lags, b) is not the only issue the electorate care about, c) the supply of money is not infinite, d) the supply of labour is not fungible and e) in this specific case, policy on immigration is generally driven by people not immigrating, so the incentives are not aligned.