Goods Complementarity
Complementarity describes the relationship between goods that are consumed together. Strong complements are goods rarely consumed without each other. The degree of complementarity can be measured using cross-price elasticity of demand.
Real World
When printer manufacturers like HP sell printers cheaply but charge high prices for ink cartridges, they exploit complementarity — customers locked into HP printers must buy HP-compatible ink, boosting long-run revenue.
Exam Focus
Distinguish weak from strong complements using XED magnitude; examiners reward real examples showing how complementarity affects firm pricing strategy.
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