They didn't have to follow - and they spent big on players long before PSG or City ever came on to the scene. One or two clubs can't inflate the market on their own. That's not how this works. The market is inflated because of the ever-increasing, and vastly successful, commercialisation of football. Whenever lots of money comes into football, the biggest players don't hold back in splashing a lot of that on the biggest names. Look at the insane spending of the late 90s Serie A.
@DOTA got it right: this is how capitalism works. The German model is pretty much the only safeguard.
Also, if Barcelona's spending was based strictly on their revenues, they wouldn't be up to their eyeballs in debt.