Substitution and size effect for factor demand revisited

Abstract We reconsider the decomposition of comparative statics effect a factor price increase on (unconditional) demand into substitution and size (or level) effect. While for own go same negative direction, cross cannot be signed unambiguously, in general. But two cases regularity, homotheticity complementarity, is negative. furthermore show by example that both special effects are still ambiguous, but under complementarity unconditional always Hence, if happens to positive, it dominated this case. further without such regularity assumptions ambiguous. Finally, we study impact cost, which can also or decrease.