Substitutes

Goods or services whose demand rises or falls as the price of another good rises or falls. The cross-elasticity of demand is positive. They tend to be goods that serve similar purposes, like the NSAIDs Fiorinal and Lanorinal, two drugs each containing aspirin (acetylsalicylic acid) and both in capsule form. In other markets, you can get generic aspirin under the name 'aspirin'. But beware! In some markets, 'Aspirin' is a protected name and is owned by the German company Bayer AG. In these markets, Aspirin sells at a higher price than the generic form. So chemically identical goods - perfect substitutes (unless you prefer your medicines to be initially capped) - do not always cost the same and the higher-priced version still finds buyers.

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