Equilibrio parziale vs. generale

I modelli microeconomici sono generalmente classificati come modelli di equilibrio parziale e generale. Come laico, capisco che l'equilibrio parziale focalizza l'attenzione su alcune variabili economiche per trovare l'equilibrio, mentre l'eq generale. i modelli catturano un'interazione più ampia.

Oltre a ciò, quali sono le differenze chiave tra i due tipi di modellazione? Ci sono vantaggi e svantaggi per ciascuno di essi?

Mettiamo la risposta sintetica di @TheAlmightyBob in un modello astratto:

Vogliamo modellare il mercato del lavoro.

Ipotesi sulla struttura dei mercati: mercato dei beni e mercato del lavoro sono perfettamente competitivi. Tutti i partecipanti sono "troppo piccoli" economicamente e non possono influenzare il prezzo di equilibrio attraverso le loro quantità richieste / fornite - sono "acquirenti di prezzi". Mercati "chiari": i prezzi si adeguano in modo tale che la quantità effettivamente fornita sia uguale alla quantità effettivamente acquistata.

Assunzione degli agenti: vi sono $n$ lavoratori identici e $m$ identiche aziende che partecipano al mercato. Entrambe le popolazioni sono fisse.

Altre ipotesi: a) ambiente deterministico, b) un bene deperibile prodotto, c) modello in "termini reali" (salario reale ecc., Scalato dal prezzo del bene prodotto).

L'azienda tipica produce secondo la tecnologia

$$Y_j = F_j(K_j,L_j;\mathbf q) \tag{1}$$

dove $\mathbf q$ è un vettore di parametri. La perfetta concorrenza nel mercato dei beni e un bene deperibile implicano la vendita di tutta la produzione prodotta. L'obiettivo dell'azienda è la massimizzazione dei rendimenti in conto capitale sulla scelta del lavoro.

$$\max_{L_j} \pi_j = F_j(K_j,L_j;\mathbf q) - wL_j$$

We are modelling the labor market, so we are interested in the first-order condition

$$\frac {\partial \pi_j}{\partial L_j} = 0 \tag{2}$$ and the corresponding input demand schedule

$$L_j^* = L_j^*\left(K_j, \mathbf q, w\right) \tag{3}$$

Total Labor demand is $L_d = m\cdot L_j^*$. The labor market equilibrium assumption implies

$$L_d = L_s \Rightarrow m\cdot L_j^*\left(K_j, \mathbf q, w\right) = L_s \tag{4}$$

which implicitly expresses the equilibrium wage as a function of technology constants, of per-firm capital, and of labor supplied. In order to fully characterize the labor market, we need to derive also the optimal labor supply.

Each identical worker derives utility from consumption and leisure, subject to a biological limit of available time, $T$, and the budget constraint that consumption equals wage income:

$$\max_{L_i} U(C_i, T-L_i;\mathbf \gamma),\;\; \text{s.t.} \;C_i= wL_i$$

where $\gamma$ is a vector of preference parameters, indicating the relative weight between utility from consumption, and from leisure. This will give us individual labor supply as

$$L_i^* = L_i^*(T,w, \mathbf \gamma) \tag{5}$$

and total labor supply is $L_s = n\cdot L_i^*$. Plugging this into $(4)$ we obtain

$$mL_j^*\left(K_j, \mathbf q, w\right) =n L_i^*(T,w, \mathbf \gamma) \tag{6}$$

If we stop here, we have a partial equilibrium model that examines the labor market. We have fully described the market, and the goals and the constraints of the participants in it (firms and workers), related to the specific market. We can perform comparative statics in order to see how the various components of $(6)$ affect the equilibrium wage. Among them, there is the capital-per-firm term, whose effects on wage we can also consider based on $(6)$, by treating it as varying arbitrarily.

In order to turn this model into a general equilibrium model:
a) We need to specify things about capital: who owns it/controls it/makes decisions on it. What is the objective functions of these decision makers. This will lead us to an optimal $K_j^*$ as a function of the structure we will impose here. Then, comparative statics with respect to $K_j$ will turn into comparative statics with respect to the factors that affect the determination of $K_j^*$, which may very well prove to involve also $\mathbf q, w$ and even the other parameters in $(6)$, changing in this way the comparative statics results obtained in a partial equilibrium setting.

b) We also need to take into account any macroeconomic identities that characterize this economy, something along the lines of $mY_j \equiv ...$ where the right hand side will be determined by the assumptions we make related to capital, but also, for example, by whether we will assume that the economy is closed or open, or partially open to the outside economic system.

So, apart from being more complicated as a model, it may also lead us to different conclusions than partial equilibrium analysis.

The main difference between partial and general equilibrium models is, that partial equilibrium models assume that what happens on the market one wants to analyze has no effect on other markets.

Therefore in partial equilibrium models one only considers a market for one good and assumes that the price of every other good or the wealth one has does not change.

In general equilibrium models every market has an effect on every other market and therefore a change in one market may have changes in another market and therefore one has to model every market simultaneously.

Advantages and downsides

Partial equilibrium models are simpler and changes, e.g. in the form of supply or demand functions, are easier to implement.

General equilibrium models are, generally speaking, more realistic, in theory they model what partial equilibrium models model and, in addition to that, also the interaction between several markets. However, as general equilibrium models are more complicated, it is not clear if a model will result in a unique or even stable equilibrium and one has to make further assumptions to account for that.

Applications In general, if you want to analyze whole economies, interaction between markets or anything in which you think that the good (e.g. labor) that you want to analyze is so important, that it may have serious effects on other markets, one usually uses general equilibrium models. Therefore, most applications of GET are currently in Macroeconomics or Finance.

If you want to analyze a single market (and if you think the effect on other markets is not that important) or if you want to introduce assumptions that would lead to problems in general equilibrium models (e.g. oligopoly models), they you probably should use a partial equilibrium model.

the main difference of partial equilibrium and general equilibrium is the determination of price and quantity in the market where by partial deal with only one market while general deal with the market in the economy and their interaction.

The partial equilibrium analysis studies the relationship between only selected few variables, keeping others unchanged. Whereas the general equilibrium analysis enables us to study the behaviour of economic variables taking full account of the interaction between those variables and the rest of the economy. In partial equilibrium analysis, the determination of the price of a good is simplified by just looking at the price of one good, and assuming that the prices of all other goods remain constant. Thus the economy is in general equilibrium when commodity prices make each demand equal to its supply and factor prices make the demand for each factor equal to its supply so that all product markets and factor markets are simultaneously in equilibrium.