Complementary goods

Complementary goods are goods that are in demand together because they complement each other in their benefits . Goods that satisfy the same or similar needs and can therefore replace other goods are substitute goods .

General

Technical and / or physical dependencies can mean that some goods are mutually dependent. Each cannot develop its optimal function on its own or is even useless, but only both together. John D. Rockefeller took advantage of these dependencies as early as 1870 when he was selling petroleum lamps in China, where he owned a petroleum monopoly. In 1902 King Camp gave Gillette razors as gifts and sold the disposable razor blades he patented . The more individually the two complementary goods can be linked, the stronger their complementarity . This has an impact on demandthat affects both goods similarly or simultaneously. Companies use this market strategy to make use of the lock-in effect . It applies to all complementary goods that a system change only worthwhile if the switching costs the costs arising from a change of system benefits would not exceed.

Examples

Pipe tobacco and tobacco pipes are exemplary of this economic relationship . A drastic drop in the price of pipe tobacco also increases the demand for tobacco pipes, since only both goods are beneficial together. Further examples are:

• Automobiles and fuel
• Walkman and headphones
• Letter and postage stamp
• Hardware and software
• Printer and ink
• DVD player and DVD
• Wet razor and razor blade
• Cigarette and lighter
• Coffee machine and coffee filter or coffee capsule

Differentiation according to the degree of complementarity

Perfect complements

Perfect complements

In economics, goods are called perfect or perfect complements that necessarily complement each other and are usually only in demand together.

If two goods are perfect complements, their indifference curves run at right angles and have the form ( Leontief function ). ${\displaystyle f(x_{1},x_{2})=\min(x_{1},x_{2})}$

An example of perfect complements are left and right shoes. If a person had more left shoes than right shoes, that would not increase their usefulness, since shoes can only be worn in pairs.

In reality, it is difficult to find perfect complements, as another use can almost always be thought of (for example: another right shoe could be sold to a one-legged man).

The opposite of perfect complements are perfect substitutes .

Incomplete complements

In contrast, incomplete complements are goods that complement each other, but are also in demand individually on the market. For example: computer , printer and screen .

literature

• Pindyck / Rubinfeld: Microeconomics . Pearson Studium, 2003, 5th edition, ISBN 3-8273-7025-6 .
• Mankiw: Economics . Schäffer-Poeschl Verlag Stuttgart, 2004, 3rd edition, ISBN 978-3-7910-2163-8 .

Individual evidence

1. ^ Carl Shapiro / Hal R. Varian, Information Rules: A Strategic Guide to the Network Economy , 1999, pp. 103 ff.