This ties in with a thought chain I had this morning. While we may have an incredibly competitive environment, it is also populated by imperfect actors. You can't effectively compete against people who are not accurately evaluating the consequences of their decisions. This can be seen in sports, where illegal performance enhancers are the norm in many sports, and non-dopers can't really keep up (despite the achievements of the dopers being annulled later). This can be seen in business where someone who is willing to sell at a loss and make up for it in volume, will steal all of the customers from a legitimately profitable operation (though will soon go bankrupt as well). I'm sure there are examples in all sorts of industry where imperfect actors make decisions based on poor analysis that can potentially ruin better plans due to an overly competitive marketplace.
This is simply expecting too much.
The core issue is that other people want different things than you. You want fair sports, they want to win. You can try to make rules but they are not 100%. The only thing that would really work is if they wanted the same thing as you.
"I looked at what I think of as the food chain that led to the financial crisis, which was that you had individual consumers buying houses they couldn't afford, sold to them by realtors and property people who were competing to sell more properties at a higher price and so on. [...] I thought, hang on a second, classic economy theory tells you that a competitive marketplace is superior because competition provides a diversity of products which is good for the consumer, and it also, therefore diversifies risk. And yet, in this instance, competition has led every single one of these companies to copy each other, which had concentrated the risk. And I thought, Wow, that's interesting. That's specifically what's not supposed to happen."
More here.