Elasticity of complementarity (Hamermesh, 1993) is the percentage responsiveness of relative factor prices to a 1

percent change In any quantitative science, the terms relative change and relative difference are used to compare two quantities while taking into account the "sizes" of the things being compared, i.e. dividing by a ''standard'' or ''reference'' or ''starting'' va ...

in relative inputs.

Mathematical definition

Given the production function

f(x_1,x_2)

then the elasticity of complementarity is defined as :

c = \frac
                 
                 
          = \frac
                 .

The inverse of elasticity of complementarity is

elasticity of substitution Elasticity of substitution is the ratio of percentage change in capital-labour ratio with the percentage change in Marginal Rate of Technical Substitution. In a competitive market, it measures the percentage change in the two inputs used in respons ...

References

*Hamermesh, Daniel S., ''Labor Demand'', Princeton University Press, Princeton NJ, 1993, Elasticity (economics) {{economics-stub