Sorry to revisit this so lately!

Yes, competition is better for innovation than cooperation... hence why mono/oligopols like google, meta etc. are harmful for innovation even though those companies are undeniably very innovative. Outside of economic I still prefer lame, boring cooperation as it costs societies, and in the last resort people, less money and lives in the long run which tend to be otherwise wasted in for example competitive wars.

This devolving of power to smaller forms of organization is, in general, a good idea. However it may rapidly become a disadvantage as political and economical power are dwarfed by bigger organizational forms like national states (let alone billion people collectives like China and India). Those powers can, in the competitive scenario which is still the norm, strong arm small nations (like Wessex or Mercia) into unfavorable conditions for them.

Final note to your last paragraph: My ideal would be a direct democracy, leaving out any potentially corrupt representative. I honestly believe this is within reach due to the communicative advances you mentioned.