Let's try to figure out: how do interchangeable goods differ from complementary ones? It's simple: the first category satisfies a common need, that is, one product is completely replaced by another. The second goods complement each other, they must be used together.
Examples of such products are tea and sugar, dresses and shoes, a car and gasoline, etc. It is an indisputable fact that complementary goods that cannot be used without each other have a close relationship, expressed in demand and price. That is, if the cost of one product increases, then the demand for the second one falls. You cannot buy a shuttlecock without a badminton racket, a SIM card without a mobile phone or tablet.
Complementary goods, or rather their relationship with each other, can be characterized as negative: when the price of one increases, demand for the other falls sharply. It is easy to understand why this happens: the first product is bought much worse due to the increase in its cost. Without it, there is no particular sense in buying the second product, which is why demand for it falls. In economics, this is called the negative type of cross elasticity of demand.
Let's look at an example. Let's cash app database assume that the price of an iPhone has increased by 5%, which has led to a decrease in people's need for it. If a person does not buy a phone, then he does not need cases for it - the demand for accessories has also fallen. It is this fact that allows us to consider the goods as complementary.
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Alexander Kuleshov
Alexander Kuleshov
General Director of Sales Generator LLC
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