This article empirically examines the implications of competition among Dutch secondary schools: (1) regarding the sorting of students by performance levels in schools at the begiining of secondary education; and (2) regarding performance gains in the secondary school career, controlling for the aforementioned sorting patterns. We used data from about 13,000 students enrolled at 102 school locations in The Netherlands. Using differences in the distribution of competition intensity across local education markets, we applied Kernel estimation techniques to match students from relatively high‐ to low‐competitive markets on the basis of student and household characteristics. Our results indicate that, with increasing competition, relatively more schools target the group of high‐achieving students. As a result, schools will arguably have to enrol more ‘students at the margin’ to ensure sufficient enrolment rates. To conclude, we observed that, accounting for sorting patterns, competition was related to small negligible improvements in academic achievement at the bottom of the distribution of student performance within the first three years of secondary education. Furthermore, a negative result for competition was found for categorical academic classrooms settings.