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Robust Comparative Statics of Non-monotone Shocks in Large Aggregative Games

Author

Listed:
  • Carmen Camacho

    (Centre National de la Recherche Scientifique(CNRS) and Université Paris 1 Panthéon-Sorbonne, France)

  • Takashi Kamihigashi

    (Research Institute for Economics & Business Administration (RIEB), Kobe University, Japan)

  • Cagri Saglam

    (Department of Economics, Bilkent University, Turkey)

Abstract

A policy change that involves redistribution of income or wealth is typically controversial, affecting some people positively but others negatively. In this paper we extend the "robust comparative statics" result on large aggregative games established by Acemoglu and Jensen (2010, 49th IEEE Conference on Decision and Control, 3133-3139) to possibly controversial policy changes. In particular, we show that both the smallest and the largest equilibrium values of an aggregate variable increase in response to a policy change to which individuals' reactions may be mixed but the overall aggregate response is positive. We provide sufficient conditions for such a policy change in terms of distributional changes in parameters.

Suggested Citation

  • Carmen Camacho & Takashi Kamihigashi & Cagri Saglam, 2015. "Robust Comparative Statics of Non-monotone Shocks in Large Aggregative Games," Discussion Paper Series DP2015-25, Research Institute for Economics & Business Administration, Kobe University.
  • Handle: RePEc:kob:dpaper:dp2015-25
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    File URL: https://www.rieb.kobe-u.ac.jp/academic/ra/dp/English/DP2015-25.pdf
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    References listed on IDEAS

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    Cited by:

    1. Camacho, Carmen & Kamihigashi, Takashi & Sağlam, Çağrı, 2018. "Robust comparative statics for non-monotone shocks in large aggregative games," Journal of Economic Theory, Elsevier, vol. 174(C), pages 288-299.
    2. Andreas Hefti & Julian Teichgräber, 2021. "Inequality in models with a competition for market shares," ECON - Working Papers 375, Department of Economics - University of Zurich.

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    More about this item

    Keywords

    Large aggregative games; Robust comparative statics; Positive shocks; Stochastic dominance; Mean-preserving spreads;
    All these keywords.

    JEL classification:

    • C02 - Mathematical and Quantitative Methods - - General - - - Mathematical Economics
    • C60 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - General
    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D04 - Microeconomics - - General - - - Microeconomic Policy: Formulation; Implementation; Evaluation
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General

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