Who would buy a sedan any more when you're screwed over this way? With phones and vehicles, we're stuck in this prisoner's dilemma situation where larger sizes lead to less desirability of small sizes, and the cycle repeats over and over again.
Same thing happens with public transit/car usage -- as more people use cars, public transit thins out, deals with more traffic on the roads, and becomes scarier because there are fewer "normal" people on public transit to make you feel safe from crime.
Curious if there's an research on how to escape from this kind of death spiral -- my suspicion is that the only real way out is regulation, because otherwise there's no way to overcome the self-reinforcing impact of these decisions.