A new competition model combining the 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 model for two competing products that is essentially considered an extension of the Lotka-Volterra competition model. This model was first introduced by Guseo (2004) but the application of the model in a real case was missing from that paper. This extension came from the observation that in a standard Bass model, the role of innovators is vital because it incorporates the innovative effect due to external action (a firm communication, advertising) that is proportional to the residual market. Consequently the role is highly relevant 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 that 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, the adoption of competing products contributes to the residual market with different weights. This generates the perception of brands-specific residual markets. Furthermore, the model overtakes the heavy restriction of synchronicity between the two products and provides a simple solution based on the Bass model.