Complementarity in a Simple General Equilibrium Production Model

A simple three-factor, two-good general equilibrium model, allowing complementarity in production, is examined. Conclusions of general equilibrium economics with two factors must be reinterpreted and qualified when complementarity is possible. Sign patterns of how changing factor endowments affect outputs and how changing prices affect factor payments are uncovered for a small open economy. Results should prove valuable to a wide range of economists interested in extending general equilibrium analysis to include complementary factors of production.