Supermodularity and Complementarity in Economics: An Elementary Survey
University of Arizona - Department of Economics; University of Arizona
CORE Discussion Paper No. 2003/104
The literature on supermodular optimization and games is surveyed from the perspective of potential users in economics. This methodology provides a new approach for comparative statics based only on critical assumptions, and allows a general analysis of games with strategic complementarities. The results are presented in a simplified yet rigourous manner, without reference to lattice theory, for the special case of onedimensional parameter and actions sets, with the emphasis being on wide accessibility. Detailed applications are presented for well-known models of consumer behavior, monopoly pass-through, Bertrand and Cournot competition, strategic R&D, search and matching. Wherever appropriate, useful tricks for applications and comparative comments are inserted.
Number of Pages in PDF File: 35
Keywords: complementarity, supermodularity, comparative statics, ordinal/cardinal, strategic complementarity, oligopoly
JEL Classification: A23, C60, C72, D43working papers series
Date posted: April 23, 2007
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