First mover advantage
When industries get deregulated to become markets, uncertainty is unleashed. At first the markets will be tremendously inefficient and illiquid.
You can make the markets more liquid by getting more people to trade with you. One way is to be part of the process. That is, help push for deregulation in your favour. Influence the rule-making authorities. Make the rules attractive to other players.
Another is to know more about the market so that you can identify arbitrage opportunities. In the beginning, you may make more money because of the inefficiency. But as more participants enter the market, they cream off the margins and narrow the spreads.
But as more markets get created, other kinds of money-making opportunities surface. You can arbitrage between markets. Buy something in one market and sell or deliver it in another.
If your strategy is to open the markets, then it's important to be a first mover. To do so, you need a big research team and a big regulatory/government affairs department to lobby the rule-makers.
It's expensive to go where no one has gone before.
9 December 2001 Sunday