Except institutional investors ARE restricted based on what kind of investment they need to fill out the specific portfolio they're administering.
Oftentimes these restrictions limit them to a subset of companies in a certain market to fill a specific niche in the name of diversification. Are they artificial limitations? Sure, but only in the sense that there is no regulation saying they cannot find a different company to invest in.
All that to say that things are not nearly as cut-and-dry as it may seem.
With regards to the ultimate thrust of my comment, to a greater or lesser degree than ordinary "consumers" (I hate that term) within monopoly-dominated product or service fields?
Is there any investment category in which an institutional really has only, say, 1--3 options? Because that is the relevant comparison.
I'm going to posit that investment markets are overall more competitive than consumption markets.
(They may have other issues, including some that, of all people, Matt Ridley's pointed out. I believe it's somewhere in this discussion with Johan Norberg and David Runciman, which I've listened to previously but not just now in referencing it: "The New Optimism" on Intelligence Squared, <https://www.intelligencesquared.com/events/the-new-optimism-...>. It's worth listening to on its own. I'll admit to being partial to Team Runciman myself, but Ridley's comment on asset markets has been bouncing around my noggin for a while.)
Oftentimes these restrictions limit them to a subset of companies in a certain market to fill a specific niche in the name of diversification. Are they artificial limitations? Sure, but only in the sense that there is no regulation saying they cannot find a different company to invest in.
All that to say that things are not nearly as cut-and-dry as it may seem.