Comparative statics and heterogeneity

Finn Christensen

Economic Theory, 2019, vol. 67, issue 3, No 8, 665-702

Abstract: Abstract This paper elucidates the role played by the heterogeneity of interactions between the endogenous variables of a model in determining the model’s behavior. It is known that comparative statics are well-behaved if these interactions are relatively small, but the formal condition imposed on the Jacobian which typically captures this idea–diagonal dominance–ignores the distribution of the interaction terms. I provide a new condition on the Jacobian—mean positive dominance—which better captures a trade-off between the size and heterogeneity of interaction terms. In accord with Samuelson’s (Foundations of economic analysis, Oxford University Press, London, 1947) correspondence principle, I also show that mean positive dominance yields stability and uniqueness results. I apply the results to provide new, or to generalize known, comparative statics results in the following settings: optimization problems, platform monopoly, normality, differentiable games including Cournot oligopoly, and competitive exchange economies.

Keywords: Comparative statics; Mean positive dominance; B-matrix; Correspondence principle; Cournot oligopoly; Normal goods (search for similar items in EconPapers)
JEL-codes: C6 C72 D11 D4 D5 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
http://link.springer.com/10.1007/s00199-018-1116-x Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:joecth:v:67:y:2019:i:3:d:10.1007_s00199-018-1116-x

Ordering information: This journal article can be ordered from
http://www.springer. ... eory/journal/199/PS2

DOI: 10.1007/s00199-018-1116-x

Access Statistics for this article

Economic Theory is currently edited by Nichoals Yanneils

More articles in Economic Theory from Springer, Society for the Advancement of Economic Theory (SAET) Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().