Nonetheless, if large numbers of people were unwilling to pay that price/accept those terms, competitors would enter the market to cater for them.

And yet, in reality, this doesn't always happen. For years, people complained about restaurants being full of cigarette smoke; and some people had to stay home and not go out because they could not tolerate cigarette smoke. AFAIK, no one ever, anywhere in the US, voluntarily opened a restaurant that did not allow smoking. I may be wrong; but I would have remembered if any restaurant I had ever encountered had ever advertised the fact that they were a non-smoking restaurant, so that I could have gone there.