In all living systems, the genetic information is replicated by the self-encoded replicase (Rep); this can be said to be a self-encoding system. Recently, we constructed a self-encoding system in liposomes as an artificial cell model, consisting of a reconstituted translation system and an RNA encoding the catalytic subunit of Qbeta Rep and the RNA was replicated by the self-encoded Rep produced by the translation reaction. In this system, both the ribosome (Rib) and Rep bind to the same RNA for translation and replication, respectively. Thus, there could be a dilemma: effective RNA replication requires high levels of Rep translation, but excessive translation in turn inhibits replication. Herein, we actually observed the competition between the Rib and Rep, and evaluated the effect for RNA replication by constructing a kinetic model that quantitatively explained the behavior of the self-encoding system. Both the experimental and theoretical results consistently indicated that the balance between translation and replication is critical for an efficient self-encoded system, and we determined the optimum balance.