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Article
Strict Monotonicity in Comparative Statics
Journal of Economic Theory (1998)
  • Aaron S. Edlin
  • Chris Shannon
Abstract

Economists commonly seek to show that one variable increases in response to changes in another variable. This paper provides sufficient conditions to draw such strict monotone comparative statics conclusions in optimization problems with and without binding constraints. These results extend the lattice-theoretic results of Milgrom and Shannon [10] 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 applications involving holdup problems, output decisions, optimal tax problems, and modern manufacturing.

Publication Date
July, 1998
Citation Information
Aaron S. Edlin and Chris Shannon. "Strict Monotonicity in Comparative Statics" Journal of Economic Theory Vol. 81 Iss. 1 (1998)
Available at: http://works.bepress.com/aaron_edlin/13/