Although I'm not sure to what event you are referring to in your post, I do agree with your statements.
In commercial business, the parties shall come to an agreeable solution; the airliner shall compensate sufficiently; the police shall be used for other duties, not to resolve conflicts over a contract.
In general, indeed it is not easy to compete to existing airliners, but I must say, many big airliners are playing the cards as they are allowed by law. Any large corporation has political influence, airliners, oil companies, food conglomerates, you name it.
Competition may not only come from private money, but also government money (china, emirates) or at least backed by governments (in Europe we have to deal with eg China Airlines and Emirates flying for such low prices per chair, so low it is for sure not sustainable, but with government shareholding and/or backing anything is possible).
In my book, the price for a seat in an aircraft is often not covering the really costs. Especially when we would add the cost to environment pollution/damaging into the cost price (we still do not do this anywhere in the world). The price difference for the same seat is getting bigger and bigger; with the businesses paying the top dollar since they require more than the private person to be able to fly personnel to their customers to close a deal, or to solve an issue, last minute. The last minute as well as the ever increasing price differences for the same seat, are actually direct causes from the free market, but that is another topic than you addressed in your post :)
If I understand correctly, United Airlines boarded passengers ont a plane for a flight, and then after the fact decided they were overbooked because some UA employees wanted to hitch a ride too. SOP is to deal with overbooking in the terminal before boarding. Since people were already seated, they offered to buy out passengers with cash, a ticked for another flight, and a hotel room. There were no takers after they raised the cash offer. So they randomly picked 4 passengers to kick. One of those passengers was a doctor who objected to being kicked out of his seat, and the airline called the cops to beat him up and drag him off by force instead of trying to make a better deal.
UA screwed up, and they punished a customer.
Very interesting approach to customer service. Indeed, I do agree, this should have been settled through negotiation and by offering the right compensation.