Supermodularity and Complementarity in Economics: An Elementary Survey

CORE Discussion Paper No. 2003/104

35 Pages Posted: 23 Apr 2007

See all articles by Rabah Amir

Rabah Amir

University of Arizona - Department of Economics; University of Arizona

Date Written: December 2003

Abstract

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.

Keywords: complementarity, supermodularity, comparative statics, ordinal/cardinal, strategic complementarity, oligopoly

JEL Classification: A23, C60, C72, D43

Suggested Citation

Amir, Rabah, Supermodularity and Complementarity in Economics: An Elementary Survey (December 2003). Available at SSRN: https://ssrn.com/abstract=981364 or http://dx.doi.org/10.2139/ssrn.981364

Rabah Amir (Contact Author)

University of Arizona - Department of Economics ( email )

Tucson, AZ 85721
United States

University of Arizona ( email )

Department of History
Tucson, AZ 85721
United States

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