Strategic Decisions in the Transition to Deregulated Markets

摘要

Liberalisation of markets is supposed to be an adequate procedure to satisfy the worldwide demand for innovations. However, the transition from regulated markets to competition is a disequilibrium phenomenon and requires specific consideration of the appearing dynamics. We present in this paper a simple, yet general, model which is instrumental in understanding the likely market evolution during a liberalisation process. Furthermore, the developed System Dynamics-based model provides the possibility to simulate strategic decision-making in out-of-equilibrium markets caused by deregulation. The impacts on firm and market performance of a price-maker strategy, enabled through process innovation, on the one hand and a differentiation strategy on the other hand are discussed in details. The model is adapted to a goods market, albeit the presented implications have much wider use.