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Strict Monotonicity in Comparative Statics

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Aaron S. Edlin and Chris Shannon.

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Abstract

This note provides sufficient conditions to draw strict monotone comparative statics conclusions in optimization problems. These results extend the lattice-theoretic results of Milgrom and Shannon (1994) by imposing a stronger differential version of the single crossing property and arguing from first- order conditions. We illustrate the importance of these results through examples involving holdup problems and optimal tax problems.

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Paper provided by University of California at Berkeley in its series Economics Working Papers with number 95-238.

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Date of creation: 01 Jul 1995
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Handle: RePEc:ucb:calbwp:95-238

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  2. Felli, Leonhardo & Roberts, Kevin, 2000. "Does Competition Solve the Hold-Up Problem?," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
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  3. Rabah Amir & Isabelle Maret & Michael Troge, 2004. "On Taxation Pass-Through for a Monopoly Firm," Working Papers of BETA 2004-10, Bureau d'Economie Théorique et Appliquée, ULP, Strasbourg. [Downloadable!]
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  4. DE LA CROIX, David & SOMMACAL, Alessandro, 2006. "A theory of medicine effectiveness, differential mortality, income inequality and growth for pre-industrial England," CORE Discussion Papers 2006045, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE). [Downloadable!]
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  5. 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. [Downloadable!]
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  6. Ilya Segal, 1998. "Contracting with Externalities," Public Economics 9802002, EconWPA. [Downloadable!]
  7. Roy, Sunanda & Sabarwal, Tarun, 2005. "Monotone Comparative Statics for Games with Strategic Substitutes," MPRA Paper 4709, University Library of Munich, Germany, revised 04 Sep 2007. [Downloadable!]
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  8. Yutaka Suzuki, 2006. "Equilibrium incentives and accumulation of relational skills in a dynamic model of hold up," Economics Bulletin, Economics Bulletin, vol. 12(7), pages 1-11. [Downloadable!]
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  10. Juan J. Ganuza, 1998. "Competition and Cost Overruns. Optimal Misspecification of Procurement Contracts," Economics Working Papers 471, Department of Economics and Business, Universitat Pompeu Fabra, revised Mar 2002. [Downloadable!]
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  13. Francisco M. Gonzalez & Shouyong Shi, 2008. "An Equilibrium Theory of Learning, Search and Wages," Working Papers tecipa-328, University of Toronto, Department of Economics. [Downloadable!]
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