The red queen effect is a fascinating phenomenon that occurs all over the place. While it was founded in evolution, it is simply a pattern and this pattern can be applied wherever appropriate.
In evolution, the red queen effect is where one species gain an advantage, but, the other species adapt to keep up. Both species are continually progressing with no long term advantage over the other.
Where does the name come from?
[The] Red Queen effect, [is] a reference to a character in Lewis Carroll’s Through the Looking Glass. The Red Queen tells Alice that ”in this place, it takes all the running you can do to keep in the same place.” 
Some interesting examples:
1. Thompson Reuters: On Australia's Legal Industry
The following quote is from a market report on the state of the legal industry in Australia:
One of the most challenging aspects of this new phase of competition is that much of the investment to improve and innovate gets matched by rivals. If everything is matched, everyone stays roughly in the same position.
For example, if all firms train their partners in sales skills, no one firm will gain an edge by being better at sales. For the firms that truly wish to outperform, the key lies in “softer” capabilities that are harder to emulate. These include things like agility, discipline, execution, cultural cohesion, diversity and true collaboration. In our view these will be the traits of the firms that will fly in 2016 and beyond. 
All firms are improving, while never gaining an edge over the other. A very important pattern to recognise.
2. Frogs v Flies
There are lots of ways in which the frogs, who want to eat flies, and the flies, who want to avoid being eaten, interact.
Frogs might evolve longer tongues, for fly-catching purposes; flies might evolve faster flight, to escape. Flies might evolve an unpleasant taste, or even excrete poisons that damage the frogs, and so on.
We'll pick one (hypothetical) possibility. If a frog has a particularly sticky tongue, it will find it easier to catch flies. But if flies have particularly slippery bodies, they will find it easier to escape, even if the tongue touches them.
Imagine a stable situation in which a certain number of frogs live on a pond and eat a certain proportion of the flies around them each year. This is a kind of equilibrium, but it is unstable, not an ESS, as you can see by imagining that because of a mutation (or even just through the natural variations between individuals) a frog develops an extra sticky tongue.
It will do well, compared with other frogs, and genes for extra sticky tongues will spread through the frog population. At first, a larger proportion of flies gets eaten. But the ones that don’t get eaten will be the more slippery ones, so genes for extra slipperiness will spread through the fly population.
After a while, there will be the same number of frogs on the pons as before, and the same proportion of flies will be eaten each year. It look as if nothing has changed - but the frogs have stickier tongues, and the flies have more slippery bodies. 
3. Foxes v Rabbits
An analogy we can use is that of the fox, a predator, and rabbits, the fox’s prey.
The fox pursues, the rabbits run. If the fox catches the slowest rabbits, then only the fastest rabbits remain in the population and their offspring (the next generation) should be faster than the average rabbit of the present generation.
This is the basis for the phrase “survival of the fittest”: those individuals that are most “fit” in this environment are most likely to survive to reproduce.‘ However, as the prey population becomes faster and better able to avoid the predators, the predator population will die out unless it adapts to be fast enough to continue to catch the slower prey?
Hence, the faster and more successful foxes produce faster fox pups, while the slower foxes fail to survive or reproduce. Logically, this process of adaptation appears to be a positive feedback cycle. If the foxes are continually catching the slowest rabbits, the rabbit population will become faster and faster over time until we witness supersonic rabbits flashing around being chased by equally supersonic foxes. Obviously, this reductio ad absurdum result does not happen... 
4. Productivity Increases
IT investments by companies now appear to have been definitively linked with productivity increases.
However, productivity increases may not necessarily result in profitability or market share increases: If every competitor in an industry is 20% more productive, each could retain those gains—increasing the so-called producer surplus and profitability—or may pass the gains on to consumers—increasing the consumer surplus—as lower prices, in an attempt to undercut the competition and gain share.
If all market players execute similar strategies, market share may remain static; this is the Red Queen hypothesis... 
5. Invasive Species
In trying to vanquish our insect foes, we have inadvertently created superior versions of them (while also poisoning our own food, water, and soils).
Similarly, the continued use of antibiotics at current rates will only lead to increasingly virulent strains of bacteria by imposing far stronger selective pressures on disease-causing microorganisms than nature would. Because both kinds of ”bugs” can reproduce and therefore evolve many times faster than humans, we will never keep up with insects and microorganisms. That is, we have increased the pace of the Red Queen treadmill and are now desperately trying to maintain our footing.
The modern problem of invasive species illustrates what happens in the absence of the red queen effect...
What happens in the absence of the red queen effect? Or, another way to look at it... How to beat the red queen effect?
When an exotic plant or animal arrives from distant shores without its coevolved rivals and enemies, its treadmill becomes a moving walkway that allows it to travel across the landscape much faster than the native organisms, which are plodding along in place. Importing the corresponding predators often wreaks even more environmental havoc.
Introducing genetically modified organisms, which are created entirely outside an evolutionary context, could have even more devastating consequences. In a natural system that has evolved over time, each creature has its nemesis; predator and prey, parasite and host are well matched rivals.
Ecosystems are tightly woven nets of coevolved species that cannot readily be dismantled, reassembled, or fabricated without serious consequences for the integrity of the whole. Arms races in the geologic record always end, but never with victors. Instead, an external referee - a meteorite, an ice age, a methane belch - abruptly changes the criteria for fitness, and all the elaborate armaments and defences so assiduously stockpiled become as useless as a credit card in the wilderness. Then it is a matter of finding new uses for the specialized machinery developed under the old regime. 
Normally, the red queen effect occurs because both species adapt in small increments. Thus, a strategy to beat the red queen effect is to introduce a vastly different element in the environment that causes chaos. It's effective because the current landscape is not prepared to handle such big shift. Incremental adaptations are not possible with rapid change.
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 Lee VanValen, A New Evolutionary Law (the original paper)
 Reading the Rocks: The Autobiography of the Earth By Marcia Bjornerud
 Deep Simplicity: Bringing Order to Chaos and Complexity by John Gribbin
 Melbourne Law School & Thompson Reuters, 2015 Australia: State of the Legal Market - paper
 Chasing the Red Queen: The Evolutionary Race Between Agricultural Pests and Poisons by Andy Dyer
 Cloudonomics: The Business Value of Cloud Computing by Joe Weinman
Founder: Lee VanValen
Note: Also called the ‘Red Queen’s Race’ and the ‘Red Queen’s Hypothesis’
Categorisation: biology → evolution
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