Title

A Complete Theory Of Comparative Statics For Differentiable Optimization Problems

Abstract

A new comparative statics formalism using generalized compensated derivatives is presented that, in contrast to existing methodologies, directly yields constraint-free semidefiniteness results for any differentiable, constrained optimization problem. The formalism provides a natural and powerful method of constructing comparative statics results, free of constraints and unrestricted in scope. New results on envelope relations, invariance conditions, rank inequalities and non-uniqueness are derived that greatly extend their utility and reach. The methodology is illustrated by deriving the comparative statics of multiple linear constraint utility maximization models and the principal-agent problem with hidden actions, both highly nontrivial and hitherto unsolved problems. © 2017 Wiley. All rights reserved.

Publication Date

1-1-2006

Publication Title

Metroeconomica

Volume

57

Issue

1

Number of Pages

31-67

Document Type

Article

Personal Identifier

scopus

DOI Link

https://doi.org/10.1111/j.1467-999X.2006.00232.x

Socpus ID

84992734826 (Scopus)

Source API URL

https://api.elsevier.com/content/abstract/scopus_id/84992734826

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