I don't know about the current market for building blocks. But my guess is that Lego is benefiting from monopolist pricing. This is just a guess; I don't really have good knowledge of pricing and products that exist in this category.
If there are less well-known brands, with possibly lower quality, that sell for lower prices, Lego's continued success would argue that these competing products aren't perfect substitutes. In other words, Lego extracts a premium for its unique attributes: Quality, the prestige of the brand name, exclusive licenses for movie-themed sets, or patented brick designs might be some of the fences that could be protecting their market share.
Economics 101: If it's easy to build businesses that replicate your goods and services, then competitors will enter the market and bid each other down until prices reach levels that make profits disappear. (If someone's making a profit, then someone else can and will bid a little lower and gain market share in exchange for a smaller per-unit profit.)
If Lego has a unique success formula that other companies can't duplicate for whatever reason, then they can act as a monopoly and charge a price that maximizes unit profit times volume.
If there are less well-known brands, with possibly lower quality, that sell for lower prices, Lego's continued success would argue that these competing products aren't perfect substitutes. In other words, Lego extracts a premium for its unique attributes: Quality, the prestige of the brand name, exclusive licenses for movie-themed sets, or patented brick designs might be some of the fences that could be protecting their market share.
Economics 101: If it's easy to build businesses that replicate your goods and services, then competitors will enter the market and bid each other down until prices reach levels that make profits disappear. (If someone's making a profit, then someone else can and will bid a little lower and gain market share in exchange for a smaller per-unit profit.)
If Lego has a unique success formula that other companies can't duplicate for whatever reason, then they can act as a monopoly and charge a price that maximizes unit profit times volume.