Government competition is not fair, because governments don't play by the same rules as businesses. They can make money by fiat through taxes. They can and usually do lose money on services they provide. Businesses simply can't compete with the power of taxation. It should come as no surprise that there are no book rental companies when there are libraries.
I'm a libertarian but i believe in public rights of way. I'm finw with a single provider of roads, provided they are not toll roads but rather "dumb" roads that let me go when and where I please. This is in contrast to government-sanctioned but opportunistically managed toll-roads with dynamic pricing that rips me off every time I have an important meeting to get to by turning into a "protection racket" for my important business.
The rest of the stuff about "fair" x or y is not really relevant. Markets are supposed to be "free" and not "rigged", but neither of these two concepts imply "fair" in the sense you are using it. Every company on the NYSE hasi its own cost of capital--is that 'fair'? no. its not fair to the owners. But that does not imply that the market is not free for capiral or that the market for capital is 'rigged'.
There are plenty of ways that government services can be provided to extend markets geographic reach, variety, and product depth without getting into some nasty discussion of socialism/totalitarianism etc. There are some services that are more-efficiently organized through the government. In that respect, a government entity is just like a non-profit that competes with a for-profit or private foundation entity (eg universities). And more ...
Of course government should provide roads. And water, and sewage, and a police force, and fire protection, and libraries, etc. What made you think I didn't agree with that? You are fighting a straw man.
And "fair" absolutely is relevant, from a market-wide POV. Of COURSE some companies have natural advantages over others. That's great. They should win. When the better competitors DON'T win, you have a market fairness problem. If government is providing a service at higher cost to the taxpayer than if a private company was providing it, then there is a problem. And this happens all the time, because the sticker price of government services is always low, or zero, even though the real cost can be very high.
