The Meaning of Partial Equilibrium

by Steven Suranovic ©1997-2004

Trade 90-2  





Partial equilibrium analysis means that the effects of policy actions are examined only in the markets which are directly affected. Supply and demand curves are used to depict the price effects of policies. Producer and consumer surplus is used to measure the welfare effects on participants in the market.

A partial equilibrium analysis either ignores effects in other industries in the economy or assumes that the sector in question is very very small and therefore has little if any impact on other sectors of the economy.




Next Index Forum Home

International Trade Theory and Policy Lecture Notes: ©1997-2004 Steven M. Suranovic
Last Updated on 2/25/97