Question

difference between walrasian and marshallian approach of equilibrium?

Answer 1

Marshallian equilibrium:

It is a partial analysis. In this equilibrium, the determination of the price of a good is simplified by just looking at the price of one good, and assuming ceterus paribus (keeping all other factors affecting demand and supply, constant) specifically that the prices of all other goods remain constant . Then the demand and supply curves, intersect to form the equilibrium.

Walrasian equilibrium:

Also known as the Competitive equilibrium, this follows the traditional concept of economic equilibrium, in which analysis of commodity markets is done keeping flexible prices.

This looks at the competitive environment where each trader decision of quantity is so small compared to the total quantity traded in aggregate, that in the market their individual decisions lead to unchanged prices

These such Competitive markets set an ideal standard through which other market structures are evaluated.

Answer 2

The aim of this paper is to ponder upon MarshallÕs conception of equilibrium and to confront it withWalrasÕs. In a first section, I present a rational reconstruction of the Marshallian conception. In contrast to its standard tripartite classification interpretation, I claim that this conception is based on two interlinked equilibrium concepts, normal equilibrium and market equilibrium. Several features are brought out : (a) this conception is based on what I call the Ôperiod of analysisÕ hypothesis; (b) in this conception disequilibrium states have an effective; (c) the notion of long period equilirium then turns out to have a most elusive meaning; In a second section, I compare Marshall and Walras on equilibrium and time.



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