Comparative statics of the firm

Complementarities arise naturally in diverse models of optimal decision-making in a firm. Theoretical properties of supermodular functions provide a powerful tool for analyzing qualitative properties in such circumstances. This paper considers a general model of the firm and gives sufficient conditions for complementarities to hold and for optimal decisions to be monotone with a parameter. A variety of specific models of the firm are shown to satisfy these conditions. Necessary conditions delimit those models of the firm that may exhibit monotone optimal decisions. (C) 1995 Academic Press, Inc.