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

Summarize
Perspective

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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