It's a given that competition is healthy for the capitalistic system. Without competition, prices go up and quality goes down. Even with competition, prices can go up and quality can go down, but at least the consumer can choose their poison. Publishing has always been a competitive marketplace. In the early days of copyright, publishers competed with each other to produce the same book in different countries, and the publishers in the US often didn't pay foreign authors a penny. If I remember, improvements in this situation helped to improve Charles Dickens view of America after a long absence:-)
In the modern publishing industry, competition can be organic (authors independently conceiving and writing books for publication) or it can be driven by business calculations (authors or publishers creating books specifically to compete with successful titles). Both types of competition are generally seen as healthy for the publishing industry, and there's no proof that the latter produces lower quality books than the former. I'm certainly aware of cases where the progenitor of a new niche title had a great idea with mediocre execution, while later competing titles did a better job, whether or not they supplanted the market share of the original.
Me-too publishing is at least as common in fiction as in nonfiction, and the resulting "product" in fiction probably has less to recommend it than in the nonfiction world, where at least the author of the knock-off might get a few of the facts right. I've been buying increasing numbers of nonfiction books over the past couple couple years, as I've gotten less tolerant of myself for making mistakes that could have been avoided with a little homework. While I'm still more inclined to experimentation than narration, a little guidance can save a lot of time. About half the books I buy don't get read when on closer inspection they turn out to be fluff pieces on the subject with excellent titles. Anecdotally speaking, the fluff books turn out to be calculated competition far more often rather than original sin.
Competition does result in a larger variety of titles to choose from, but it also leads to overly specific tomes in which the whole message of the book is delivered on the cover. New titles keep printers and pulpers in business, and it would be tough for Barnes & Noble to fill a store with truly unique books and remain in business. But it's easier for the large trades playing the numbers game to dish out and take competing titles than for the small press or the self publisher. My view is that competition is healthy for everybody else, but I'd just as soon be left in peace, thank you very much.