Estimating product cannibalisation in wholesale using multivariate Hawkes processes with inhibition
Isabella Deutsch, Gordon J. Ross
The Annals of Applied Statistics · 2025 · Volume 19 · Issue 1
Abstract
Product cannibalisation in the marketplace refers to the decrease in the sales of one product due to competition from another product. We examine this phenomenon in a wholesale data set provided by a major international company. We use a multivariate Hawkes process where each product is represented by a dimension, with cross-inhibition effects that model product cannibalisation. To implement the Hawkes process with inhibition, we resolve challenges regarding the integration of the intensity function and introduce a new, less restrictive condition for stability, as existing conditions are unnecessarily strict under inhibition. We conduct our analysis in a Bayesian framework for which we design a dimension-independent prior on the cross-inhibition based on a reparametrisation.
Keywords
intensity function, point process, prior choice, stability
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