Monotone Comparative Statics for Games With Strategic Substitutes

Sunanda Roy and Tarun Sabarwal ()
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Sunanda Roy: College of Business and Public Administration, Drake University

No 200810, WORKING PAPERS SERIES IN THEORETICAL AND APPLIED ECONOMICS from University of Kansas, Department of Economics

Abstract: Under some conditions, parameterized games with strategic substitutes exhibit monotone comparative statics of equilibria. These conditions relate to a tradeoff between a direct pa- rameter effect and an opposing, indirect strategic substitute effect. If the indirect effect does not dominate the direct effect, monotone comparative statics of equilibria are guaranteed. These conditions are available for best-response functions, differentiable payoff functions, and general payoff functions. Results are extended to payoff functions that may yield best- response correspondences. The analysis applies to asymmetric equilibria. Several examples are provided.

Keywords: Monotone comparative statics; Nonincreasing functions; Strategic substitutes; Parameterized games (search for similar items in EconPapers)
JEL-codes: C60 C61 C62 C72 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cse and nep-gth
Date: Written
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Working Paper: Monotone Comparative Statics for Games with Strategic Substitutes (2007)
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