The Neglect of Monotone Comparative Static Methods

26 Pages Posted: 18 Jun 2008 Last revised: 3 Sep 2008

See all articles by Carol Horton Tremblay

Carol Horton Tremblay

Oregon State University - Department of Economics

Victor J. Tremblay

Oregon State University - Department of Economics

Date Written: May 31, 2008

Abstract

Monotone methods enable comparative static analysis without the restrictive assumptions of the implicit function theorem. Ease of use and flexibility in solving comparative static and game theory problems have made monotone methods popular in the economics literature and in graduate courses, but they are still absent from undergraduate mathematical economics courses and textbooks. We illustrate the generality of monotone comparative statics relative to the implicit function approach. For example, to sign the effect of a discrete policy shift on an optimal control or choice variable, one need only check that marginal returns increase with the policy parameter. We also apply monotone methods in game theory settings. As mathematical economics courses and majors gain popularity, incorporating monotone methods into curriculum and textbooks would provide a modern treatment of comparative static analysis.

Keywords: comparative statics, monotonicity, supermodularity, mathematical economics

JEL Classification: A22, C61, C70

Suggested Citation

Tremblay, Carol Horton and Tremblay, Victor J., The Neglect of Monotone Comparative Static Methods (May 31, 2008). Available at SSRN: https://ssrn.com/abstract=1147186 or http://dx.doi.org/10.2139/ssrn.1147186

Carol Horton Tremblay (Contact Author)

Oregon State University - Department of Economics ( email )

Corvallis, OR 97331
United States

Victor J. Tremblay

Oregon State University - Department of Economics ( email )

Corvallis, OR 97331
United States

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