The first problem with competitive federalism is that the central government must be powerful enough to make and enforce the rules of competition, but the central government must not control the policies of the regional and local governments.
If the central government is powerful enough to make and enforce the rules of competition, then the central government could use the power to impose policies on the regional and local governments.
But if the central government is too weak to impose policies on the regional and local governments, then how can the central government make and enforce the rules of competition?