Markov perfect equilibria in industries with complementarities

This paper considers the existence and computation of Markov per feet equil ibria in games with a "monotone" structure. Specifically, it provides a con structive proof of the existence of Markov perfect equilibria for a class o f games in which a) there is a continuum of players, b) each player has the same per period payoff function and c) these per period payoff functions a re super-modular in the players current and past action and have increasing differences in the player's current action and the entire distribution of actions chosen by other players. The Markov perfect equilibria that are ana lyzed are symmetric, not in the sense that each player adopts the same acti on in any period, but rather in the sense that each player uses the same po licy function. Since agents are typically distributed across many states th ey will typically take different actions. The formal environment considered has particular application to models of i ndustries (or economies) in which firms face costs of price adjustment. It is in this context that the results are developed.