I think the human trait of "competitiveness" is more-or-less hard-wired into individuals. Some kids are naturally competitive, and "want to win", while others are not.
Frankly, I believe either disposition is fine, and neither is a major predictor of future success on their own.
I don't believe a Participation Trophy will dampen a competitive kid's personal drive to win any more than a first place trophy will transform a non-competitive kid who let's say happens to be a member of a championship team.
There are plenty of areas where youngsters are rewarded/judged strictly according to performance, how about mathematics or vocabulary examinations? The answer is either correct or incorrect.