Jeff Nolan says "be like Goldilocks".
There is no "right" amount of competition, but too much is bad and too little is also bad, so it's somewhere in between.
The title actually comes from a model I was writing about software engineering. In writing frameworks, you need to find the right balance between extensibility and abstraction.
The moral is: Balance is the key to just about everything. The hard part is finding the right middle ground, and knowing you should and should not make compromises on.