As many other adsense publishers, I happen run a website that sells a product. Obviously, as product sellers we all have we all have our competitors within our niche and we all develop strategies to deal with the competition, after all it's just one everyday aspect of running a business.
I've always maintained that as Adsense publishers however, our true competitors are MFA's. MFA's are different. Unlike competitors in the conventional sense they often employ deception as their sole luring strategy. Therefore as a competitor, I can not develop counter strategies to monitor or compete against them. This is why I block the deceptive MFA competitor rather than legitimate competitor within my niche.
If I sell green widgets and my visitor in looking for green widgets decides to compare prices by seeking my legitimate competitor selling green widgets, then that's a choice the visitor will decide to make regardless of whether my competitor is advertising the green widgets on my site or not. If it is inevitable that my visitor is going to make the decision to leave my site in search of green widget alternatives, then I would relish the opportunity of being paid for providing a quality lead. Who knows? That visitor may return to my site because they had decided that my product was superior and because my website carried some credibility by providing alternative leads also.
I know that there is always the argument that the visitor may not look through my site because they may succumb to a well written competitor's ad beforehand, but I rather they succumb to a well written competitor's ad that takes them to a legitimate site, than a deceptive but well written MFA that takes them to a place of frustration (keep in mind also that MFA's that are not well written at all will also scare customers away because they make your landing page look like a joke}
Now my business model may not work for everyone, but in my case the product that I sell (which is labour intensive to produce) requires quite a bit of awareness from the consumers point of view. Well before introducing adsense, I found that if my visitor doesn't have the concentration span to take the time getting to know my product they tend switch off and leave without buying or they end asking obvious questions to which the answers are already in front of them on my website. I take the attitude that I am now making money from customers who would normally leave because of their limited attention span in addition to those who were always destined to seek out my competitor of green widgets.