Elasticity of complementarity

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Elasticity of complementarity (Hamermesh, 1993) is the percentage responsiveness of relative factor prices to a 1 percent change in relative inputs.

Mathematical definition[edit]

Given the production function then the elasticity of complementarity is defined as

The inverse of elasticity of complementarity is elasticity of substitution.

References[edit]

  • Hamermesh, Daniel S., Labor Demand, Princeton University Press, Princeton NJ, 1993, ISBN 0-691-02587-8