Difference between walrasian and marshallian equilibrium
Answers
The above question asks about the difference between the following equilibriums:
1- marshallian
2-walrasian ( competitive equilibrium)
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.