Paradox of competition

Paradox of competition in economics names a model of a situation where measures, which offer a competitive advantage to an individual economic entity, lead to nullification of advantage if all others behave in the same way. In some cases the finite state is even more disadvantageous for everybody than before (for the totality as well as for the individual). The term Paradox of competition (German: Konkurrenzparadoxon) was coined by German economist Wolfgang Stützel. It is about a case of a rationality trap.

Stützel distinguishes three categories of paradoxes of competition:

Wolfgang Stützel analyses paradoxes of competition using the concept of Balances Mechanics (German: Saldenmechanik). Specifically he defines and distinguishes validness which is valid for individual economic entities respectively individual groups (Partial sentence), and validness which counts for the totality of economic entities (Global sentence).

Concerning the pursuit of export surpluses he distinguishes as follows:

On overall economy examination (macroeconomics, aggregation problem) the benefit which individual economies want to achieve for themselves (legitimately) often appears as so called lead effect as against an inevitable lag effect of others. When lag effects are condoned, no paradox of competition arises. Solely because individual supply and individual demand turn out to be more elastic than overall supply and overall demand the classical paradox of competition can occur.

...
Wikipedia