Deregulated Markets

In the last few decades many new economic opportunities have been associated with top down political measures to deregulate markets that were dominated by (semi-) government monopolies such as the telecommunications and energy markets. Allowing market parties to enter these markets, freed up government budgets and created economic opportunities and growth potential.

Other emerging markets are associated with the development of new technologies and opening up access to their development to individuals and smaller businesses. Examples are:internet, mobile applications and alternative energy sources and -distribution.

In some cases a problem is posed in the public sphere that is then translated to a demand for market solutions as the basis of these new markets. Examples are: global warming and polution, government inefficiency, government deficits, high taxes, overregulation etc.

The overarching theme of these new markets is one of changing a top down centralised (government) approach to solving problems and controlling power and wealth to one where individual (entrepreneurs) have more (bottom up) control over the way funds are utilised; freeing up access to the wealth associated with this control to these individuals/entrepreneurs also.

In effect this is a transfer of power and resources from the public sphere, centraly regulated by the law and political voting to the private sphere and the economy regulated by the market and voting with the dollar.

Small Business Threats And Opportunities

What does this mean for small business and individual entrepreneurs? In many cases there will be large opportunities. Any new market emerging is potentially a new opportunity. However: you must pick your battles. New markets can be incompatible with your expertise, resources or other factors intrinsic to you as an entrepreneur or investor.

But more importantly: there are no recipes for guaranteed success and some emerging new markets will be less well conceived then others for sound economical reasons intrinsic to that individual emerging market. Markets are not bottom up machineries in the sense that they transfer wealth from the few to the many or all by definition. They have their own power consolidating mechanisms, and contain many risk factors of their own. Understanding these will prevent you and your business or investments to jump on the wrong bandwagon.

Monopolies With Benefits

Many economists agree that some (public) benefits are better organized in ((semi-) government) monopolies for instance because the investment levels necessary to realize them are too high to allow more then one party onto that market without destroying the other, raising pricelevels, hollowing out the service and disrupting that market altogether. Such a market will most likely return to a more regulated state after an experiment with opening it up has failed leading to public costs. For instance: a limited railway network is opened up to the competition. As a result none of the trains ride on time, ticket prices are raised and service deteriorates, shrinking the market because there are alternative modes of transportation that are now becoming more attractive. Such an ill conceived deregulation is probably no basis for long term investments or business ventures. And yet small railway companies are operating on parts of the infrastructure that are less cost effective for larger players.


In some cases a public benefit relies on it's uniformity for acceptance and therefor for the market to function. For instance: you decide to print your own currency because you want to challenge the government monopoly. Entering such a market would seem to make no economic sense and yet that is precisely what is happening on the web! Facebook and other parties with large user bases are introducing credits of their own, in effect creating a currency for it's virtual nation of 500 million+ (FB) users and vendors (for instance of online games) as well as users will most likely accept this currency as valid.

Legal Monopolies

Sometimes markets are protected by legal restrictions. For instance: developing medicins for small populations of people with rare diseases is highly protected by patents and government regulation. The retail cost of these medicines is kept relatively high as a consequence. Development of such medicines by yourself and undercutting the price of a large competitor would hardly make any sense unless perhaps in an open source like volunteer-based infrastructure. Ignoring patents and other international law-based restrictions could also be a possible answer. For instance some years ago Indian companies decided to ignore international patents on medicines to cater to their own low-income population of people in need of those medicines that are cheap to produce but expensive because of the patent restrictions on them. This did not seem to be a sustainable position in the long run because the international community and the pharmaceutical industry exercised pressure on the Indian government and those companies to make them stop the unlicensed production and distribution of such medicines.

Natural Oligopolies

In other cases markets are typically divided by a few large players in an oligopoly because access to resources is restricted and the commodity produced is sold necessarily at a low price, creating a difficulty for new entrants on that market which cannot be overcome unless huge risks are taken. New entrants would spark a pricewar that can only be overcome with the help of vast resources and will lead in the end to a return to the status quo at the expense of all players involved. For instance: you have access to a limited energy source such as a wind turbine or small oil well in your back yard. You have no chance of competing with multinational energy companies to sell energy to end users directly. Your only hope is that one of them will buy it from you. And yet in the near future you may be able to bypass such players all together because of the grid infrastructure that will allow direct trading of excess energy you might have to parties other then those large corporations (albeit through an infrastructure they will probably own, control and operate on your behalf).

Discipline Of The Market

In some other cases markets that cater to whole populations thus spreading the risks and benefits can be entered succesfully by targeting low risk/ high benefit sections of the market. For instance: creating a health insurance policy for non smoking highly educated people in their twenties, may sound like a good bet. However: such a proposition may be obvious to many parties leading to excess competition. And yet this is precisely what many small (internet-) insurance companies have been doing: finding a lucrative niche of the market that is underserviced by larger players and offering attractive rates to these low risk groups. Their propositions can not only be copied by new entrants however but also by existing parties who's access profit-margins from their traditional channels can be used as a huge source of funding for advertising their own newer low cost channels, thus undercutting all new entrants without similar funds of their own. The discipline of the market does not only demand the understanding of lucrative niches and their wishes and demands but also unique added value and ways to communicate that uniqueness at low cost if you are a small or medium sized business. Open source technological innovation and social media might just hold the answer for you if you feel the competition (well funded or not) breathing down your neck. Ofcourse these hold risks of their own, so in the end it all comes down to the unique combination individual entrepreneurs make of all the means available to them.