JoVE Logo

Sign In

2.6 : Effect of Related Goods on Demand Curve: Complementary Goods

Complementary goods are products that are typically used together, such as PlayStations and its games or gasoline and cars. The price of these goods can significantly impact the demand for their counterparts.

The relationship between the price of complementary goods and the demand for a product is an inverse one:

Price Increase: When the price of one product (e.g., gasoline) increases, it decreases the demand for its complement (gasoline cars), assuming all other factors remain constant.

Price Decrease: Conversely, when the price of one product decreases, it increases the demand for its complement. This concept is known as the complementary goods effect.

Understanding this relationship is crucial for businesses when setting prices and market strategies. For example, offering a bundle deal where purchasing one product includes a discount on its complementary good can increase overall demand and potentially lead to higher sales and revenue.

Therefore, businesses need to consider not only their pricing strategies but also those of their complementary goods when making decisions that could impact consumer demand.

Tags

Complementary GoodsDemand CurvePrice ImpactInverse RelationshipPricing StrategiesBundle DealsConsumer DemandMarket StrategiesOverall DemandSales Revenue

From Chapter 2:

Now Playing

2.6 : Effect of Related Goods on Demand Curve: Complementary Goods

Demand and its Elasticities

457 Views

2.1 : Demand

Demand and its Elasticities

751 Views

2.2 : Law of Demand

Demand and its Elasticities

726 Views

2.3 : Mathematical Representation of the Demand Curve

Demand and its Elasticities

334 Views

2.4 : Market Demand

Demand and its Elasticities

226 Views

2.5 : Effect of Related Goods on Demand Curve: Substitutes

Demand and its Elasticities

311 Views

2.7 : Effect of Income on Demand Curve: Normal Goods and Luxury Goods

Demand and its Elasticities

384 Views

2.8 : Effect of Income on Demand Curve: Inferior Goods

Demand and its Elasticities

196 Views

2.9 : Other Factors Affecting Demand

Demand and its Elasticities

122 Views

2.10 : Elasticity of Demand (Ed)

Demand and its Elasticities

175 Views

2.11 : Ed through Percentage Method

Demand and its Elasticities

100 Views

2.12 : Degrees of Elasticity of Demand

Demand and its Elasticities

168 Views

2.13 : Degrees of Elasticity of Demand and the Demand Graph

Demand and its Elasticities

394 Views

2.14 : Ed through Mid-point Method

Demand and its Elasticities

140 Views

2.15 : Elasticity and Slope

Demand and its Elasticities

215 Views

See More

JoVE Logo

Privacy

Terms of Use

Policies

Research

Education

ABOUT JoVE

Copyright © 2025 MyJoVE Corporation. All rights reserved