Généralités

Teachers: Elena del Mercato and Pascal Gourdel - Course in English, First Semester 2026/2027

This course takes place in Room R2-20 at PSE Campus Jourdan, 48 Boulevard Jourdan, 75014 Paris on Mondays from 12:00 to 13:30 and from 14:00 to 15:30. The course starts on Monday, September 14, 2026.

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

General Presentation

General equilibrium theory studies interactions among heterogeneous agents on commodity and financial markets. The course begins with an outline of the main properties of 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.

Duration: 18 hours, from Monday, September 14 to Monday, October 19, 2026.

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, regularity, generic inefficiency).
• Externalities and market failure: Perfect internalization, Pareto improving policies.

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

Duration: 18 hours, from Monday, November 2 to Monday, December 7, 2026.

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.

APE students can take only one of the two parts above.

MMMEF students take both parts.

Prerequisites: 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)".