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A competition is simply an activity which involves a struggle to win. It may be for fun, and doesn't necessarily reward any prizes to the winner. Itcan also mean a situation in which two or more people or groups are trying to get something which not everyone can have. It is also an activity involving two or more firms, in which each firm tries to get people to buy its own goods in preference to the other firms’ goods.e.g. Competition to get into Harvard University is very intense.
A contest, on the other hand, includes the promise of handing out prizes. A contest is an event usually sponsored by an organization. A winner is selected from among two or more contestants. Contest can also mean a struggle to win power or control. e.g. Beauty Contest
The other difference is that a contest usually refers to a single event whereas a "competition" can last all season.