Suppose, there are two firms in the market, firm A and firm B, producing SKU-A & SKU-B which are substitutes of each other.
The current methodology doesn’t take into account the sequence of a strategic move by A and B. It can only simulate the scenarios where brands change prices simultaneously and not sequentially,
Even if we try to simulate scenarios sequentially by breaking in two parts, say, for example,
* firm A increased price and
* then firm A decreases price. In this case, all the consumers who have switched to firm B (due to increase in the price of firm A) will come back to firm A when it reduces to its earlier price
But this is not going to happen in reality as some consumer will have inertia/will get used to or like SKU-B after trying, the same problem will continue to exist when both firm A and B moves sequentially.
Is there any way we can solve this problem.
Thanks in advance for the help