Strict Monotonicity in Comparative Statics

Posted: 12 Aug 1998

See all articles by Aaron S. Edlin

Aaron S. Edlin

University of California at Berkeley; National Bureau of Economic Research (NBER)

Chris Shannon

University of California, Berkeley - Department of Economics

Abstract

Economists commonly seek to show that one variable increases in response to changes in another variable. This paper provides sufficient conditions to draw such strict monotone comparative statics conclusions in optimization problems with and without binding constraints. These results extend the lattice-theoretic results of Milgrom and Shannon (1994) by imposing a stronger differential version of the single crossing property and arguing from first-order conditions. We illustrate the importance of these results through applications involving holdup problems, optimal tax problems, and modern manufacturing.

JEL Classification: C61

Suggested Citation

Edlin, Aaron S. and Shannon, Chris, Strict Monotonicity in Comparative Statics. Journal of Economic Theory. Available at SSRN: https://ssrn.com/abstract=114535

Aaron S. Edlin (Contact Author)

University of California at Berkeley ( email )

Dept of Economics 549 Evans Hall #3880
Berkeley, CA 94720
United States
510-642-4719 (Phone)
510-643-0413 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Chris Shannon

University of California, Berkeley - Department of Economics ( email )

549 Evans Hall #3880
Berkeley, CA 94720-3880
United States

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