A new competition model combining Lotka- Volterra model and the Bass model in pharmacological market competition

The diffusion of products that compete in the marketplace is a strategic issue for market analysts. In this paper, we propose a new competition model for two competing products essentially thought as an extension of a Lotka-Volterra competition model. This model was introduced the first time by Guseo (2004) but in that paper the application of the model in a real case was missing. This extension came from the observation that in a standard Bass model (1969) the role of innovators has a great importance because it incorporates the innovative effect due to external action (firms communication, advertising) that is proportional to residual market and consequently it is of great relevance in the initial part of diffusion process even if it progressively reduces. Lotka-Volterra models allow for a definition of the residual market of a product category which is more general with respect to alternative approaches. The residual market is not simply defined as the difference between the initial market potential and the sum of all brands adoptions. Conversely, competing products adoptions contribute to the residual market with different weights. This generates brand specific perceived residual markets. Furthermore, the model overtakes the heavy restriction of synchronicity between the two products giving a simple solution based on the Bass model.