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Monotone comparative statics for games with strategic substitutes

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  • Roy, Sunanda
  • Sabarwal, Tarun

Abstract

Under some conditions, parameterized games with strategic substitutes exhibit monotone comparative statics of equilibria. These conditions relate to a tradeoff between a direct parameter effect and an opposing, indirect strategic substitute effect. If the indirect effect does not dominate the direct effect, monotone comparative statics of equilibria are guaranteed. These conditions are available for best-response functions, differentiable payoff functions, and general payoff functions. Results are extended to correspondences, the analysis applies to asymmetric equilibria, and several examples are provided.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Mathematical Economics.

Volume (Year): 46 (2010)
Issue (Month): 5 (September)
Pages: 793-806

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Handle: RePEc:eee:mateco:v:46:y:2010:i:5:p:793-806

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Web page: http://www.elsevier.com/locate/jmateco

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Keywords: Monotone comparative statics Nonincreasing functions Strategic substitutes Parameterized games;

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  1. Roy, Sunanda & Sabarwal, Tarun, 2006. "On the (non-)lattice structure of the equilibrium set in games with strategic substitutes," MPRA Paper 4120, University Library of Munich, Germany, revised 23 May 2007.
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Cited by:
  1. Peter Arendorf Bache & Anders Laugesen, 2013. "Monotone Comparative Statics for the Industry Composition," Economics Working Papers, School of Economics and Management, University of Aarhus 2013-10, School of Economics and Management, University of Aarhus.
  2. Acemoglu, Daron & Jensen, Martin Kaae, 2013. "Aggregate comparative statics," Games and Economic Behavior, Elsevier, Elsevier, vol. 81(C), pages 27-49.
  3. Roy, Sunanda & Sabarwal, Tarun, 2012. "Characterizing Stability Properties in Games with Strategic Substitutes," Staff General Research Papers, Iowa State University, Department of Economics 34778, Iowa State University, Department of Economics.
  4. Shirai, Koji, 2010. "An existence theorem for Cournot-Walras equilibria in a monopolistically competitive economy," Journal of Mathematical Economics, Elsevier, Elsevier, vol. 46(6), pages 1093-1102, November.
  5. Eric Hoffmann, 2013. "Global Games Selection in Games with Strategic Substitutes or Complements," WORKING PAPERS SERIES IN THEORETICAL AND APPLIED ECONOMICS, University of Kansas, Department of Economics 201308, University of Kansas, Department of Economics.

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