On the Consumer Value of Complementarity: A Benefit Function Approach

Abstract

The article develops a conceptual model of the consumer value of complementarity and illustrates its usefulness in an application to fisheries. Complementarity arises when some goods have a positive effect on the marginal value of other goods. We propose a measurement of the value of complementarity based on the benefit function. Our econometric analysis of fish consumption in Italy examines these issues, with special attention given to dynamics. Our results show that, while short‐run fish demand is characterized by substitution relationships, complementarity does develop in the intermediate run and in the long run.

Keywords: benefit function, complementarity, duality, inverse demand