Complementary goods are goods that complement or condition one another in terms of their usefulness and are therefore often in demand together. They are to be distinguished from substitute goods that can replace other – mostly similar – goods.
In this lesson we will explain to you what exactly complementary goods are, what typical properties they have and what significance they have for industry and trade. At the end of the lesson, you can test your knowledge with a few practice questions.
Why should you know complementary goods?
Complementary goods are of great importance insofar as their sales depend on that of another good or can significantly increase it. They are particularly important in retail, as they make up a large part of sales there.
Properties of complementary goods
According to psyknowhow.com, complementary goods are characterized by the fact that there is a technical or physical dependency between them. Depending on the degree of dependency, complementary goods can either condition one another or increase the benefits.
The automobile is an example of this. It requires petrol or diesel to be able to operate. Instead, an expensive gasoline with additives can be used, which promises more engine power, cleaner combustion, etc. and thereby increases the benefit, but is not necessary.
Degree of complementarity
The more closely two products are linked, the stronger the degree of complementarity. Their maximum is reached when a product does not work without the associated complementary goods or does not have any recognizable benefit. In addition, optional accessories that extend the usefulness of a product are also referred to as complementary goods.
Complete and incomplete complements
Depending on how much two products are dependent on each other, they are divided into complete complements and incomplete complements. Products that necessarily complement each other and are therefore always in demand together are always referred to as perfect complements.
Such goods can often be found in retail as complete sets. Graphically, the indifference curve is always right-angled with complete complements. Whoever buys product A also buys product B in the same number.
Complementary goods: perfect complements
full complements: examples
The following examples illustrate the relationship between complete complementaries. Some of the examples below work without their complement, but do not develop any benefit.
- Motor vehicles and gasoline
- Computers and operating systems
- Printer and toner / ink
- Letter and postage stamp
- Power drill and drill
- Vacuum cleaners and vacuum cleaner bags
incomplete complements: examples
In contrast to complete complements, incomplete complements can also be used independently of one another, as the following examples show.
- PC games and expansions (DLC, downloadable content)
- Vacuum cleaner and various attachments
- Pressure washer and various nozzles
- Automobiles and roof racks
- Computers and printers