Strict Single Crossing and the Spence-Mirrlees Condition: A Comment on Monotone Comparative Statics

Abstract

Milgrom and Shannon [1994] assert that under appropriate conditions the Spence-Mirrlees condition is equivalent to their single crossing property, and that the strict versions are also equivalent. In this note, however, we give counterexamples which show that their strict single crossing property may hold even though the strict Spence-Mirrlees condition fails. In fact, we show that the strict single crossing property may hold even though the strict Spence-Mirrlees condition holds only on a set of arbitrarily small measure. We also give a correct statement of the relationship between the Spence-Mirrlees condition and the single crossing property. Finally, we illustrate the fact that the strict single crossing property can allow both pooling and separating equilibria while the strict Spence-Mirrlees condition eliminates the possibility of pooling equilibria.

JEL Classification: C61, D89