Elasticity of complementarity
- Elasticity of complementarity
Elasticity of complementarity (Hamermesh, 1993) is the percentage responsiveness of relative factor prices to a 1 percent change in relative inputs.
Mathematical definition
Given the production function then the elasticity of complementarity is defined as:
The inverse of elasticity of complementarity is elasticity of substitution.
References
*Hamermesh, Daniel S., "Labor Demand", Princeton University Press, Princeton NJ, 1993, ISBN 0-691-02587-8
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