It is a bit of a stereotype that nothing happened in medieval Europe and Greeks and Romans did everything. That is nonsense. Medieval Europe saw a massive increase in the use of mills and machinery, that never occurred in the Roman Empire or China: https://erikexamines.substack.com/p/the-european-mill-revolu...

The development of advanced plate armor, gunpowder weapons, mechanical clocks, medieval cathedrals, innovation within glass making, lenses, spectacles etc suggest medieval society was plenty capable on innovation. Both earlier Greek city states and later medieval Italian city states demonstrated a large amount of innovation.

I would rather say that large monopolies outcompete smaller competing units in the short term but loose in the long term. We can see that in markets as well as in comparison between China and Europe. Fragmented Europe was at a disadvantage for several hundred years until that fragmentation started paying off.