Interaction among three substitute products: an extended innovation diffusion model

In this paper, we propose a model to describe the mutual interactions among the lifecycles of three substitute products acting simultaneously in a common market, thus competing for the same customers or cooperating to supply demand. To date, the literature only describes models for two competitors; therefore, the present work represents the first attempt at creating and implementing a model for three actors. The new model is applied to real data in the energy context, and its performance is compared to the performance of current models for two competitors. Regarding the datasets examined, the new model shows a relevant improvement in terms of forecasting performance, that is forecasting accuracy and prediction confidence band width