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Why can demand and supply principle misuse to predict consumer behaviour when the two firms participate advertisement to promote their products in the same time? I shall explain as below: Assume that two competing firms must decide whether to have a big advertising budget. Advertising would allow one firm to steal some of the other's customers. But when they both advertise, the effects on customer demand cancel out. The firms end up having spent money needlessly.We might expect that neither firm would choose to spend much on advertising, but the model shows that this logic is off base. When the firms make their choices independently and they care only about their own profits, each one has an incentive to advertise, regardless of what the other firm does. When the other firm does not advertise, you can steal customers from it if you do advertise, when the other firm does advertise, you have to advertise to prevent loss of customers. So, these two firms end up in a bad equilibrium in which both have to waste resources. This market can not apply demand and supply principle to predict consumer behaviours because they depends advertisement to promote their products. If these two firms advertise their products in the same time. Then, it is not possible that if one firm increases it price and it will cause its customer number loss, due to its advertise can help it to attract customers to consider its product from television or radio or newspapers or magazine promotion channels. So, I suppose that these two firms decide to increase their price, when they advertise their products to let customers to know in the same time. They will not lose their customers or reduce their customers easily. Because their customers can be persuaded to choose to buy their products to compare other similar products in preference. So, their increasing price will not influence their customers number lose easily. It explains that demand and supply principle is not right to this case, so demand an