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Supermodularity and Complementarity in Economics: An Elementary Survey
Author(s) -
Amir Rabah
Publication year - 2005
Publication title -
southern economic journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.762
H-Index - 58
eISSN - 2325-8012
pISSN - 0038-4038
DOI - 10.1002/j.2325-8012.2005.tb00664.x
Subject(s) - cournot competition , comparative statics , complementarity (molecular biology) , mathematical economics , monopoly , economics , matching (statistics) , strategic complements , bertrand competition , computer science , microeconomics , mathematics , oligopoly , statistics , genetics , biology
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.