Complementary good

In <a href="/facts/Economics/HYctA2Dn">economics</a>, a complementary good is a <a href="/facts/Goods_(economics)/AtK6gQh2">good</a> whose appeal increases with the popularity of its complement. Technically, it displays a negative <a href="/facts/Cross_elasticity_of_demand/zHKo0jUD">cross elasticity of demand</a> and that <a href="/facts/Demand/mtb1m6F0">demand</a> for it increases when the <a href="/facts/Price/CmGnPt1P">price</a> of another good decreases. If 
 
 
 
 A
 
 
 {\displaystyle A}
 
 is a complement to 
 
 
 
 B
 
 
 {\displaystyle B}
 
, an increase in the price of 
 
 
 
 A
 
 
 {\displaystyle A}
 
 will result in a negative movement along the demand curve of 
 
 
 
 A
 
 
 {\displaystyle A}
 
 and cause the demand <a href="/facts/Curve/xBQ0pTBW">curve</a> for 
 
 
 
 B
 
 
 {\displaystyle B}
 
 to <a href="/facts/Demand_curve/lALNI8BX">shift inward</a>; less of each good will be demanded. Conversely, a decrease in the price of 
 
 
 
 A
 
 
 {\displaystyle A}
 
 will result in a positive movement along the demand curve of 
 
 
 
 A
 
 
 {\displaystyle A}
 
 and cause the demand curve of 
 
 
 
 B
 
 
 {\displaystyle B}
 
 to <a href="/facts/Demand_curve/lALNI8BX">shift outward</a>; more of each good will be demanded. This is in contrast to a <a href="/facts/Substitute_good/oK7UJNjw">substitute good</a>, whose demand decreases when its substitute's price decreases.
When two goods are complements, they experience joint demand - the demand of one good is linked to the demand for another good. Therefore, if a higher quantity is demanded of one good, a higher quantity will also be demanded of the other, and vice versa. For example, the demand for razor blades may depend on the number of razors in use; this is why razors have sometimes been sold as <a href="/facts/Loss_leader/o9HJXVeK">loss leaders</a>, to increase demand for the associated blades. Another example is that sometimes a toothbrush is packaged free with toothpaste. The toothbrush is a complement to the toothpaste; the <a href="/facts/Manufacturing_cost/2eoGRwo7">cost of producing</a> a toothbrush may be higher than toothpaste, but its sales depends on the demand of toothpaste.
All non-complementary goods can be considered substitutes. If 
 
 
 
 x
 
 
 {\displaystyle x}
 
 and 
 
 
 
 y
 
 
 {\displaystyle y}
 
 are rough complements in an everyday sense, then consumers are <a href="/facts/Willingness_to_pay/wdUycuSo">willing to pay</a> more for each <a href="/facts/Marginal_product/Qh8bkbx7">marginal unit</a> of good 
 
 
 
 x
 
 
 {\displaystyle x}
 
 as they accumulate more 
 
 
 
 y
 
 
 {\displaystyle y}
 
. The opposite is true for substitutes: the consumer is willing to pay less for each marginal unit of good "
 
 
 
 z
 
 
 {\displaystyle z}
 
" as it accumulates more of good "
 
 
 
 y
 
 
 {\displaystyle y}
 
".
Complementarity may be driven by <a href="/facts/Psychology/duoqW7Sz">psychological processes</a> in which the consumption of one good (e.g., cola) stimulates demand for its complements (e.g., a cheeseburger). Consumption of a food or beverage <a href="/facts/Goal_setting/1IvADhEv">activates a goal</a> to consume its complements: foods that consumers believe would taste better together. Drinking cola increases consumers' willingness to pay for a cheeseburger. This effect appears to be contingent on <a href="/facts/Consumer_behaviour/6dly1pUV">consumer perceptions</a> of these relationships rather than their sensory properties.

Complementary good open-in-new

Complementary good