Généralités

Teachers: Elena del Mercato and Pascal Gourdel - Course in English, First Semester 2025/2026

This course takes place in Room R1-10 at PSE Campus Jourdan, 48 Boulevard Jourdan, 75014 Paris on Mondays from 15:45 to 17:15 and from 17:30 to 19:00. The course starts on Monday, September 15, and the detailed schedule of all the CLASSES is attached below.

E-mails: Elena.delMercato@univ-paris1.fr, Pascal.Gourdel@univ-paris1.fr 

General Presentation

The general equilibrium theory studies the interactions among heterogeneous agents on commodity and financial markets. The course begins with an outline of the main properties of a competitive equilibrium in the classical Arrow-Debreu model (existence, efficiency, local uniqueness). The course then focuses on advanced questions arising from market imperfections, such as externalities and financial markets.

Key words: equilibrium, competition, market imperfections: externalities, financial markets.

The course consists of two parts: "General equilibrium and Externalities" and "General equilibrium and Financial Markets".

Part on "General equilibrium and Externalities"- Elena del Mercato

After each class, the slides will be available in the folder below (EdM's SLIDES).

Duration: 18 hours, from Monday, September 15 to Monday, October 20, 2025.

Mode of evaluation: attendance, one homework, presentation of a selected research article, and final exam.

Midterm Exam: Monday, October 20, during the class.

Content:

• An overview of general equilibrium.
• Competitive equilibrium. Existence of an equilibrium. An overview of other basic results (efficiency, regular economies).
• Competitive equilibrium with externalities. An overview of basic results (existence, regular economies).
• Externalities and market failure: Perfect internalization, Pareto improving policies.

Part on "General equilibrium and Financial Markets"- Pascal Gourdel

Duration: 18 hours, from Monday, November 3 to Monday, December 8, 2025.

Mode of evaluation:  attendance, one homework, presentation of a selected research article, and final exam.

Content:

• The two period economy with uncertainty; risk aversion.
• Arrow securities, financial markets ; real, nominal and numeraire assets.
• Absence of arbitrage opportunities, existence of present value vector, uniqueness, risk neutral probability.
• Completeness of the financial structure.
• Existence of a financial equilibrium for nominal and numeraire asset; generic existence for real assets.
• Behaviour of the firms and incomplete markets

Fundamentals: Chapter 3 Classical Demand Thoery, pages 40-57, in MWG. 

MWG reads "Mas-Colell, A., Whinston, M.D., and Green, J.R., Microeconomic Theory. Oxford University Press (1995)".