The Complementarity reference article from the English Wikipedia on 24-Apr-2004 (provided by Fixed Reference: snapshots of Wikipedia from wikipedia.org)

Complementarity

Complementarity is a concept in economics similar to that of externality. Two goods are complements if their cross elasticity of demand is negative. That is, as the price of one good increases, the demand to the other good decreases. When a large number of complementary products are interconnected, network externalities can arise. In general, complementarity exists when the decisions of other economic agents changes how I value things.

A good example of a complementarity is the example of keyboards. Virtually all keyboards use the QWERTY style, which was created so that typewriters wouldn't jam. Other styles include that promoted by Dvorak. Because QWERTY keyboards are so popular, an individual values it more than the one proposed by Dvorak, even though there is no reason to believe QWERTY to be inherently superior.

See also: network externality, cross elasticity of demand, list of economics topics

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