Complementary good

In economics, a complementary good is a good whose appeal increases with the popularity of its complement.^{[further explanation needed]} Technically, it displays a negative cross elasticity of demand and that demand for it increases when the price of another good decreases.^[1] If ${\displaystyle A}$ is a complement to ${\displaystyle B}$, an increase in the price of ${\displaystyle A}$ will result in a negative movement along the demand curve of ${\displaystyle A}$ and cause the demand curve for ${\displaystyle B}$ to shift inward; less of each good will be demanded. Conversely, a decrease in the price of ${\displaystyle A}$ will result in a positive movement along the demand curve of ${\displaystyle A}$ and cause the demand curve of ${\displaystyle B}$ to 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.^[2]

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 leaders, to increase demand for the associated blades.^[3] Another example is that sometimes a toothbrush is packaged free with toothpaste. The toothbrush is a complement to the toothpaste; the 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.^[4] If ${\displaystyle x}$ and ${\displaystyle y}$ are rough complements in an everyday sense, then consumers are willing to pay more for each marginal unit of good ${\displaystyle x}$ as they accumulate more ${\displaystyle y}$. The opposite is true for substitutes: the consumer is willing to pay less for each marginal unit of good "${\displaystyle z}$" as it accumulates more of good "${\displaystyle y}$".

Complementarity may be driven by 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 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 perceptions of these relationships rather than their sensory properties.^[5]