Policy Trends & Dynamic Advantage Public policy Visible industry specific regulation General policy environment Public policy can create, sustain, undermine or destroy firm advantage and redefine the competitive arena Firms can influence during policy window and use public arena to protect their resource investments

Policy Trends Liberalization, deregulation, privatization, marketization Social and environmental activism Politicization – minority groups, interest groups Power of ideas – equality and liberty

Contestability Theory and Unbundling Regulation of integrated monopoly markets challenged by contestability theory Segment a bundled industry into various markets and determine if they are contestable or monopoly With free entry and exit, contestable markets can be opened for competition Monopoly markets can be opened to “competition for the market” by concession, lease or competition by substitutes Unbundling of infrastructure industries

Social and Environmental Regulation Emergence of strong public interest movement in market oriented advanced economies Emergence of interest in private property rights, rule of law, and civic society in transitional economies

Policy Windows and Multiple Players Emergence of opportunities for action on given initiative Recognize opening of policy window, provide solution, and overcome opposition Understand distribution of benefits and cost among multiple players and nature of political competition Ability to mobilize quickly

Strategies for Seeking Dynamic Advantage Some public policies lessen or add constraints Determine whether public policy initiative creates an incentive to join with competitors, or set the firm apart from competitors