Authors
Alexei Alexandrov, Özlem Bedre-Defolie
Publication date
2017/3/1
Journal
Journal of Economic Theory
Volume
168
Pages
44-54
Publisher
Academic Press
Description
The LeChatelier–Samuelson principle states that, as a reaction to a shock, an agent's short-run adjustment of an affected action is smaller than its long-run adjustment (when the agent can also adjust other related actions). We extend the principle to strategic environments where the long-run adjustment also accounts for other players adjusting their strategies. We show that the principle holds for supermodular games (strategic complements) satisfying monotone comparative statics and provide sufficient conditions for the principle to hold in games of strategic substitutes/heterogeneity. We discuss the principle's implications for cost pass-through of multiproduct firms.
Total citations
20172018201920202021202220232024132123
Scholar articles