Abstract
Economists have found it surprisingly hard to nail down the obvious intuition that in some rough unspecified way tea and coffee are substitutes, and bacon and eggs complements. Not that they can’t do it. Quite the opposite, they have all too many ways of doing it, so much so that even if their less attractive inventions are discarded still an abundance is left, each with its own usefulness and charm. Yet because complementarity and income effects are the two chief impediments to sharp results in microeconomic theory, this question of appropriate definition cannot be shrugged off. Neither does it help that what ‘appropriate’ means tends to vary from problem to problem.
This chapter was originally published in The New Palgrave: A Dictionary of Economics, 1st edition, 1987. Edited by John Eatwell, Murray Milgate and Peter Newman
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Newman, P. (1987). Substitutes and Complements. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95121-5_1821-1
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Substitutes and Complements- Published:
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Substitutes and Complements- Published:
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DOI: https://doi.org/10.1057/978-1-349-95121-5_1821-1