Complementarity, Instability and Multiplicity

A multiplicity of equilibria, steady states, cycles, etc., feature prominently in models with complementarities. Multiplicity suggests the instability of an economic system and the sensitive dependence of the equilibrium behaviour on the environment. In this paper I discuss some methodological questions concerning the economics of complementarity, with special emphasis on instability and multiplicity. A series of monopolistic competition models are developed to illustrate the argument.
JEL Classification Numbers: B41, E32, O00