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General Equilibrium

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The New Palgrave Dictionary of Economics

Abstract

Unlike partial equilibrium theory, general equilibrium theory treats as constant only non-economic influences and embraces all sales and purchases of all agents involved in exchanges. It implies that all subsets of agents are in equilibrium and that all individual agents are in equilibrium. The development of a formal general equilibrium theory in mathematical terms was initiated in the 19th century by Walras, who moved from a model of an exchange economy to an equilibrium with production. It was completed in the 1950s by McKenzie, who formalized Walrasian theory, and by Arrow and Debreu, who formalized Hicksian theory.

This chapter was originally published in The New Palgrave Dictionary of Economics, 2nd edition, 2008. Edited by Steven N. Durlauf and Lawrence E. Blume

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  1. http://link.springer.com/referencework/10.1057/978-1-349-95121-5

    Lionel W. McKenzie

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  1. Lionel W. McKenzie
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    McKenzie, L.W. (2008). General Equilibrium. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95121-5_933-2

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    • DOI: https://doi.org/10.1057/978-1-349-95121-5_933-2

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    • Publisher Name: Palgrave Macmillan, London

    • Online ISBN: 978-1-349-95121-5

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    Chapter history

    1. Latest

      General Equilibrium
      Published:
      18 April 2017

      DOI: https://doi.org/10.1057/978-1-349-95121-5_933-2

    2. Original

      General Equilibrium
      Published:
      03 December 2016

      DOI: https://doi.org/10.1057/978-1-349-95121-5_933-1

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