STRICT MONOTONICITY IN COMPARATIVE STATICS

Economists commonly seek to show that one variable increases in respon se to changes in another variable. This paper provides sufficient cond itions to draw such strict monotone comparative statics conclusions in optimization problems with and without binding constraints. These res ults extend the lattice-theoretic results of Milgrom and Shannon [10] by imposing a stronger differential version of the single crossing pro perty and arguing from first-order conditions. We illustrate the impor tance of these results through applications involving holdup problems, output decisions, optimal tax problems, and modern manufacturing. (C) 1998 Academic Press.