Yes, it is absolutely a problem along the same lines as the Prisoner's dilemma:

https://en.wikipedia.org/wiki/Prisoner%27s_dilemma

And yes, I agree, we're going to need a countervailing market mechanism to stop it from proceeding to its logical conclusion: a persistent, severe recession. Whatever the mechanism, it's going to need to be dynamic and adaptable, or it's "dead on arrival" as a solution.