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Upward and downward complementarity: the meso core of evolutionary growth theory

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Abstract

We propose that the concept of complementarity can take two distinct meanings in evolutionary economics: one referring to Adam Smith’s notion of increasing specialization and the division of labour, which we denote ‘downward complementarity’ (wholes into new parts); and a second type that refers to the discovery of emergent complementarity between extant or new components and products, which we call ‘upward complementarity’ (parts into new wholes). We outline this new conception and explore some of its analytic and theoretic implications.

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Notes

  1. Complementarity is also defined on the demand side as the dual of substitution, specifically as a way of classifying goods in a preference ordering: two goods are substitutes or complements depending on whether cross-price elasticity is negative or positive. Neoclassical economics is an operational analysis of price coordination that expresses a framework of generalized substitution—viz. agents reallocate by making substitutions in markets.

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Authors and Affiliations

  1. University of St Gallen, St Gallen, Switzerland

    Kurt Dopfer

  2. RMIT University, Melbourne, Australia

    Jason Potts

  3. Hohenheim University, Stuttgart, Germany

    Andreas Pyka

Authors
  1. Kurt Dopfer
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  2. Jason Potts
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  3. Andreas Pyka
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Correspondence to Jason Potts.

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Dopfer, K., Potts, J. & Pyka, A. Upward and downward complementarity: the meso core of evolutionary growth theory. J Evol Econ 26, 753–763 (2016). https://doi.org/10.1007/s00191-015-0434-4

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  • DOI: https://doi.org/10.1007/s00191-015-0434-4

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