Partial equilibrium

Updated: Aug 20, 2021

The 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. Partial equilibrium analysis is most useful when events in the sector studied have only small effects on the rest of the economy. See also general equilibrium.

Reference: Oxford Press Dictonary of Economics, 5th edt.

Sources & references
Risk disclaimer
James Knight
Editor of Education
James is a lead content editor for Invezz. He's an avid trader and golfer, who spends an inordinate amount of time watching Leicester City and the… read more.