Supermodularity and Complementarity

The novel methodology of supermodular optimization and games now permeates several different strands of literature in pure and applied economic theory. The main characteristic of this methodology is that it relies essentially on critical assumptions on a model's primitives to establish the desired monotone comparative statics (henceforth, MCS) conclusion. In so doing, it dispenses with superfluous assumptions that are often imposed only to facilitate the use of the classical method, based on the implicit function theorem, including smoothness, interiority, and concavity conditions.

The most widely applicable advance due to this framework of analysis is the theory of supermodular games, better known in economics as games with strategic complementarities. The main characteristic of these games is that they possess increasing reaction correspondences (that need not be continuous), reflecting a complementarity relationship between own actions and rivals' actions. As a consequence of Tarski's fixed-point theorem, the latter property guarantees the existence of pure-strategy Nash equilibrium points. Because the latter type of equilibrium is most often the desired concept in economic models, the scope of game-theoretic modeling in economics is thereby substantially enlarged. Another key observation in this respect is that supermodularity is again the relevant notion behind the monotone comparative statics of Nash equilibrium points.

With this Call for Papers, we continue our successful Collection on Supermodularity and Complementarity at the journal Economic Theory. We invite authors to submit articles dedicated to further methodological innovations with relevance to economic modeling as well as those that employ this methodology in applied economic theory settings, in industrial organization, public economics, economic dynamics and other fields of economic inquiry.