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Supermodularity and Complementarity in Economics: An Elementary Survey

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  • Rabah Amir

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 one‐dimensional 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.

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  • Rabah Amir, 2005. "Supermodularity and Complementarity in Economics: An Elementary Survey," Southern Economic Journal, John Wiley & Sons, vol. 71(3), pages 636-660, January.
    • Handle: RePEc:wly:soecon:v:71:y:2005:i:3:p:636-660
    DOI: 10.1002/j.2325-8012.2005.tb00664.x
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    More about this item

    JEL classification:

    • A23 - General Economics and Teaching - - Economic Education and Teaching of Economics - - - Graduate
    • C60 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - General
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection

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