Why Market Regulators Must Crack Down on "Involutionary" Competition: From Zero-Sum to Negative-Sum Games
When delivery riders complete 200 orders daily, algorithms clock workers to the second, and subsidy wars push entire industries into negative profit margins—economists ask: whose prosperity did competition actually create?
2 min read
The Event
China's State Administration for Market Regulation explicitly demanded "vigorous crackdowns on 'involutionary' competition" in its Q2 2026 work conference. The backdrop: extreme competitive phenomena that emerged over the past 3-5 years in platform economy sectors like ride-hailing, food delivery, and e-commerce livestreaming—platforms waging subsidy wars to drive down prices, workers' wages locked in by algorithms, merchants' margins compressed toward insolvency.
The Observation
Genuine competition should produce better products, lower prices, and higher productive efficiency. Yet involutionary competition instead delivers: longer working hours for riders and more safety accidents; declining revenue for merchants despite reduced staffing; platforms themselves losing money on subsidies. Supply chain efficiency never improves—profits merely get redistributed. In the end, nobody thrives.
Core Principle
When markets enter "perfect competition" states where marginal profits approach zero, participants sacrifice quality, safety, and labor costs just to survive. Competition has shifted from "innovation-driven" to "self-destructive"—a negative-sum game, not a zero-sum one.
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Source: 36氪