Microeconomics IV: General Competitive Equilibrium Analysis and Market Failures
This fourth part of the microeconomic sequence is the most interesting one from the real world’s point of view. The partial equilibrium models studied before are inadequate to analyze interconnected markets, and markets are in reality interconnected. To be able to view several markets simultaneously, general equilibrium models are introduced. AL locational efficiency in exchange economies and economies with production is investigated. We will also look at a number of allocation problems caused by the existence of public goods and externalities. A short introduction to the theory of public choice will be provided.