Yesterday’s post introduced the biological concept of “interference competition,” and compared big antlers with big bonuses. Today, I want to describe another form of competition recognized by biology.
Exploitation Competition: A form of competition wherein organisms indirectly compete with other organisms for resources by exploiting resources to limit the resource availability to other organisms.
A current example of how exploitation competition is good for the individual, but detrimental to the species is the rise of antibiotic resistant superbugs.
We all know people who, when they feel the first inklings of a sore throat, go to the doctor and request an antibiotic. In many cases doctors are happy to oblige as they can “fix” the individual quickly. After a few days of antibiotics, the individual’s sore throat subsides and they succeed having avoided any “down-time” due to a debilitating sickness.
Many of us don’t think about how this exploitation of antibiotics is really threatening to our species as a whole. More specifically, because individuals are exploiting the availability of antibiotics the bacteria are developing ways to resist those antibiotics and are becoming more and more threatening. To illustrate the seriousness of this issue, just last month, Dame Sally Davies, the chief medical officer of England, likened the problem of antibiotic resistance to the risks presented by international terrorism.
The World Health Organization estimates that for tuberculosis alone multi-drug resistance accounts for more than 150,000 deaths each year. That’s more deaths than all the terrorist attacks combined. This is very serious. By exploiting the availability of antibiotics, and providing a competitive advantage to the individual, we now have a reduced availability of antibiotics to the species as a whole.
You may be wondering “how does exploitation competition manifest in the economy?” One way is through the exploitation of asymmetrical information a practice commonly known as “insider trading.” More specifically, when an “insider” exploits material, non-public information he provides himself a competitive advantage in the market for his company’s stock to the detriment of other investors.
For instance, Raj Rajaratnam, a founder of the hedge fund Galleon Group, was a billionaire before his 2011 conviction and sentence of 11 years in prison for insider trading. The government estimated that his illegal activities generated profits of over $60 million; however, the opportunity costs to others and to the market as a whole is largely incalculable.
Economists generally agree that any informed trading, including insider trading, hurts investors and liquidity traders, who may be forced to trade in order to balance their portfolios or hedge their positions but are at an informational disadvantage and inevitably lose money to insiders and other informed traders.
 Henning, Peter. “Insider Trading Riddle: Why Do the Rich Risk It?.” Dealbook. The New York Times, 04 04 2012. Web. Web. 9 Apr. 2013. <http://dealbook.nytimes.com/2012/04/04/insider-trading-riddle-why-do-the-rich-risk-it/>.
 Hu, Jie, and Thomas Noe. “The Insider Trading Debate.” Federal Reserve Bank of Atlanta Economic Review. (1997): 34-45. Web. 9 Apr. 2013. <http://www.frbatlanta.org/filelegacydocs/noe-hu.pdf>.
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