One possible outcome is a scenario referred to as the Red Queen hypothesis. The expression comes from Alice in Wonderland, in which the queen runs in place but doesn't get anywhere.
In the Red Queen scenario, species that co-evolve essentially run in place. You can find lots of examples in the co-evolution of plants and insects. When a plant evolves a novel chemical defense mechanism, for example, it drives the insects to evolve a novel detoxification mechanism. You can also see the Red Queen scenario in the fossil record. Fossil evidence shows steady advances in characteristics such as shell thickness and brain size in predators and prey.
You can think of co-evolution acting this way if you imagine it in the context of an arms race. To give itself an edge, each side evolves new or better adaptations, which the other side counteracts as it adapts in response. At the start of WWI, for example, pilots shot at each other from the cockpit with pistols. Frightfully fearsome — until somebody strapped a whole machine gun to the front of a plane. Reciprocal adaptations of this sort took aircraft from the wood-and-fabric aeroplanes that the Red Baron flew over the fields of France to the carbon-fiber-and-titanium jets that fighter pilots "strap on" today. Where does that leave the respective air forces? Traveling faster than the speed of sound but not really much ahead of the other guy.
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