partial equilibrium
partial equilibriumThe method of analysis dealing with some part of the economy, deliberately ignoring possible implications of changes in this part for what happens in the rest of the economy. In studying the effects of changes in the supply and demand for a particular good on its equilibrium price and quantity a partial equilibrium analysis ignores changes in the rest of the economy, due for example to consequent changes in income distribution. This is contrasted with general equilibrium analysis, in which the repercussions of changes in any one market throughout the rest of the economy are taken into account. General equilibrium models are necessarily either much more generalized or much more complex than partial equilibrium models. Partial equilibrium analysis is most useful when events in the sector studied have only small effects in the rest of the economy.
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