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Supermodularity and complementarity in economics: an elementary survey

  • AMIR, Rabah

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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Paper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers RP with number 1823.

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Handle: RePEc:cor:louvrp:1823
Note: In : Southern Economic Journal, 71(3), 636-660, 2005
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