Editing Complementary good (section)

{{Short description|Concept in economics}}
[[File:Cross elasticity of demand complements.svg|thumb|Complementary goods exhibit a negative [[cross elasticity of demand]]: as the price of goods Y rises, the demand for good X falls.]]

In [[economics]], a '''complementary good''' is a [[Goods (economics)|good]] whose appeal increases with the popularity of its [[wikt:complementary#Adjective|complement]].{{Explain|date=October 2022|reason=A definition that explains a term with the same word is a circular definition.}} Technically, it displays a negative [[cross elasticity of demand]] and that [[demand]] for it increases when the [[price]] of another good decreases.<ref>{{cite book|last=Carbaugh|first=Robert|title=Contemporary Economics: An Applications Approach|publisher=Cengage Learning|year=2006|isbn=978-0-324-31461-8|page=[https://archive.org/details/contemporaryecon00robe/page/35 35]|url-access=registration|url=https://archive.org/details/contemporaryecon00robe/page/35}}</ref> If <math>A</math> is a complement to <math>B</math>, an increase in the price of <math>A</math> will result in a negative movement along the demand curve of <math>A</math> and cause the demand [[curve]] for <math>B</math> to [[Demand curve#Changes that decrease demand|shift inward]]; less of each good will be demanded. Conversely, a decrease in the price of <math>A</math> will result in a positive movement along the demand curve of <math>A</math> and cause the demand curve of <math>B</math> to [[Demand curve#Changes that increase demand|shift outward]]; more of each good will be demanded. This is in contrast to a [[substitute good]], whose demand decreases when its substitute's price decreases.<ref>{{cite book |title=Economics: Principles in Action |url=https://archive.org/details/economicsprincip00osul |url-access=limited |last1=O'Sullivan |first1=Arthur |last2=Sheffrin |first2=Steven M. |publisher=Pearson Prentice Hall |year=2003 |isbn=0-13-063085-3 |location=Upper Saddle River, New Jersey |page=[https://archive.org/details/economicsprincip00osul/page/n104 88] |author-link=Arthur O'Sullivan (economist) |author-link2=Steven M. Sheffrin}}</ref>

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 [[loss leader]]s, to increase demand for the associated blades.<ref>{{cite web |url=http://futureobservatory.dyndns.org/9432.htm |publisher=Future Observatory |title=Customer in Marketing by David Mercer |archive-url=https://web.archive.org/web/20130404042855/http://futureobservatory.dyndns.org/9432.htm |archive-date=2013-04-04 |url-status=dead}}</ref> Another example is that sometimes a toothbrush is packaged free with toothpaste. The toothbrush is a complement to the toothpaste; the [[Manufacturing cost|cost of producing]] a toothbrush may be higher than toothpaste, but its sales depends on the demand of toothpaste.

All non-complementary goods can be considered substitutes.<ref name="Newman">{{Cite journal |last=Newman |first=Peter |date=2016-11-30 |orig-date=1987 |title=Substitutes and Complements |url=https://link.springer.com/referenceworkentry/10.1057/978-1-349-95121-5_1821-1?page=1 |journal=The New Palgrave: A Dictionary of Economics |pages=1–7 |doi=10.1057/978-1-349-95121-5_1821-1 |isbn=978-1-349-95121-5 |access-date=2022-05-26|url-access=subscription }}</ref> If <math>x</math> and <math>y</math> are rough complements in an everyday sense, then consumers are [[Willingness to pay|willing to pay]] more for each [[Marginal product|marginal unit]] of good <math>x</math> as they accumulate more <math>y</math>. The opposite is true for substitutes: the consumer is willing to pay less for each marginal unit of good "<math>z</math>" as it accumulates more of good "<math>y</math>".

Complementarity may be driven by [[Psychology|psychological processes]] 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 [[Goal setting|activates a goal]] 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 [[Consumer behaviour|consumer perception]]s of these relationships rather than their sensory properties.<ref>{{cite journal |last1=Huh |first1=Young Eun |last2=Vosgerau |first2=Joachim |last3=Morewedge |first3=Carey K. |s2cid=4800997 |date=2016-03-14 |title=Selective Sensitization: Consuming a Food Activates a Goal to Consume its Complements |journal=Journal of Marketing Research |volume=53 |issue=6 |pages=1034–1049 |doi=10.1509/jmr.12.0240 |issn=0022-2437}}</ref>