> Upzoning doesn't guarantee increased development as developers only build when it makes financial sense to do so, and flooding the market with more units would decrease the potential profit they can make.

This doesn't really matter; developers aren't a cartel and they don't care if the margin on new projects goes down. They only have to care that the smaller margin goes to them and not someone else.

(To the extent they are a cartel, it's because they got one enforced by downzoning, because only legal force can keep people in the cartel.)