If it weren't for the competition of a world market, that really hit home in the US in the mid-70's, we would still be driving cars that weighed 2-3 tons, got 10-15 mpg, required a "tune-up" every 3-10k miles, rode on tires that typically lasted 15-20k miles, and overall the vehicle would be guaranteed against "rust-thru" for about a minute.
From a seller's perspective competition may appear to be a driver towards cheap, low quality, product. But I choose to believe that this is based on
the typical manufacturer's reaction to competition. Afterall, doesn't Mercedes-Benz still compete in the auto market? Have they "reduced" the quality and price of their product?
In-fact the Japanese had to develop up-market product lines (i.e. Lexus, Infinity, Acura) with
increased quality and price to compete with MB. Which has lead to an improved MB product as well.
Increased competition can (and often does) increase the diversity of market (i.e. the market ends up with a greater variety/selection of product). There will be those that choose to compete at the low-end of the market (lower price with perhaps marginally better quality, and/or more content, than their competitors), and those that choose to compete at the high-end with significantly increased quality and content at a greater price.
Additionally, product breakthroughs (advanced technology, quantum leaps in design, etc.) come from obscure sources more often than from the market leaders. Why didn't the development of the PC come from IBM, instead of a man in a garage? Because when a grounded business is good at what it does, it has a tendency to continue doing what it does well - instead of seeking out new markets (3M is typically looked upon as an exception to this norm).
To sum up - Competition can create new markets/technologies and can lead to increased variety in products (products for the masses, as well as for the elite).
Where are the negatives?