Supermodular function: Difference between revisions

Revision as of 09:53, 8 October 2015

Revision as of 02:55, 7 June 2016

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For example, Bulow et al. consider the interactions of many [[Imperfect competition|imperfectly competitive]] firms. When an increase in output by one firm raises the marginal revenues of the other firms, production decisions are strategic complements. When an increase in output by one firm lowers the marginal revenues of the other firms, production decisions are strategic substitutes.

A standard reference on the subject is by Topkis.<ref>Donald M. Topkis (1998), Supermodularity and Complementarity, Princeton University Press.</ref>

A supermodular [[utility function]] is often related to [[complementary goods]]. However, this view is disputed.<ref>{{Cite journal|doi=10.1016/j.jet.2008.06.004 |title=Supermodularity and preferences |journal=Journal of Economic Theory |volume=144 |issue=3 |pages=1004 |year=2009 |last1=Chambers |first1=Christopher P. |last2=Echenique |first2=Federico }}</ref>