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.