Aggregate Comparative Statics

55 Pages Posted: 9 Apr 2009

See all articles by Daron Acemoglu

Daron Acemoglu

Massachusetts Institute of Technology (MIT) - Department of Economics; Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)

Martin Kaae Jensen

affiliation not provided to SSRN

Multiple version iconThere are 2 versions of this paper

Date Written: February 22, 2009

Abstract

In aggregative games, each player's payoff depends on her own actions and an aggregate of the actions of all the players (for example, sum, product or some moment of the distribution of actions). Many common games in industrial organization, political economy, public economics, and macroeconomics can be cast as aggregative games. In most of these situations, the behavior of the aggregate is of interest both directly and also indirectly because the comparative statics of the actions of each player can be obtained as a function of the aggregate. In this paper, we provide a general and tractable framework for comparative static results in aggregative games. We focus on two classes of aggregative games: (1) aggregative of games with strategic substitutes and (2) "nice" aggregative games, where payoff functions are continuous and concave in own strategies. We provide simple sufficient conditions under which "positive shocks" to individual players increase their own actions and have monotone effects on the aggregate. We show how this framework can be applied to a variety of examples and how this enables more general and stronger comparative static results than typically obtained in the literature.

Keywords: aggregate games, contests, oligopoly, robust comparative statics, strategic substitutes

JEL Classification: C72, C62

Suggested Citation

Acemoglu, Daron and Jensen, Martin Kaae, Aggregate Comparative Statics (February 22, 2009). MIT Department of Economics Working Paper No. 09-09, Available at SSRN: https://ssrn.com/abstract=1374641 or http://dx.doi.org/10.2139/ssrn.1374641

Daron Acemoglu (Contact Author)

Massachusetts Institute of Technology (MIT) - Department of Economics ( email )

50 Memorial Drive
Room E52-380b
Cambridge, MA 02142
United States
617-253-1927 (Phone)
617-253-1330 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Martin Kaae Jensen

affiliation not provided to SSRN ( email )

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
257
Abstract Views
3,961
Rank
213,292
PlumX Metrics