Competition is a fundamental attribute of the market economy and the driving force behind market cycle. However, involution-style competition is a manifestation of excessive competition, essentially caused by market disorder leading to competition costs far exceeding competition benefits. In recent years, some traditional industries and some emerging industries in China have experienced varying degrees of involution-style competition, which not only seriously squeezes the profit space of enterprises at the micro level, but also causes an imbalance in the supply and demand structure at the macro level. It may form a vicious transmission path of decline in enterprise profits - suppression of income growth - insufficient effective demand - overcapacity supply. It has become one of the stubborn diseases that must be eliminated in the current deepening of the construction of a unified national market. From the perspective of institutional economics, the key incentive for involution-style competition is the structural contradiction between high administrative barriers and low market barriers, which has led to a large number of enterprises in China being locked in the middle and low-end links of the industrial chain. They are unable to achieve innovation and upgrading upward or quickly exit the market downward. As a result, they can only compete in a limited market space with price and quantity as the main dimensions, resulting in involution. In view of this, China should comprehensively rectify the involution-style competition in accordance with the principle of establishing and breaking down simultaneously. On the one hand, it should subtract from excessively high administrative barriers; on the other hand, it should add from excessively low market barriers, in order to break the rigidity of structural barriers and create a strong domestic circulation.
