The history of tall buildings is that of huge egos. Sure, market forces cause rational developers to build more density when land prices are high... but not skyscraper high. The risk is too significant. The existence of these monoliths, in my opinion, is best explained by psychology, not standard economics.
Can any economist here explain why skyscrapers are a bad idea?
Not an economist, but it's said in the article, skyscrapers tend to be expensive per "m2 of usable floor space". One reason for this is purely mechanical, the building must be much sturdier in order carry its weight. Also, a bigger fraction of the interior space is taken up by elevator shafts. Both of these contribute to lower usable floor space and thus higher expense.
Then there's also the question of the environment of the building, roads/mass transit/etc. also place a limit on how high the density in an area can be.
IIRC some of the highest density urban areas (in the developed world) are not terribly high, e.g. city centres like Paris or Barcelona where buildings are ~10 stories or so.