Partial Equilibrium

Equilibrium is the condition of balance among the forces acting on a system. Partial equilibrium focuses on the conditions within the system without considering its effects on, or effects from, other systems.

Perhaps the most well-known analysis of equilibrium in the business context is the balance between the forces of supply and demand for goods. Partial equilibrium is the condition of balance among forces directly affecting the supply and demand for a particular category or type of good without considering the effects on other types. For example, a partial equilibrium analysis of the supply and demand for gasoline considers the direct influence of the price of gasoline but not the effects of the price of public transportation on the supply and demand for gasoline or the ...