Topic outline

  • Teachers: Elena del Mercato & Jean Marc Bonnisseau

    Class: every Monday, from September 11 to December 18, 2023, at PSE Campus Jourdan, 48 Boulevard Jourdan, 75014 Paris.


    The class on Monday December 11 will be from 11h15 to 12h45 at Maison des sciences économiques 106 boulevard de l'Hopital

    Room S/2

    - on the First Part "General Equilibrium & Externalities" E. del Mercato: Monday, November 20 from 9:15 to 10:45 - PSE Campus, Room R1-15
    - on the Second Part "General Equilibrium & Financial Markets" J.-M. Bonisseau: Wednesday, December 20 from 9:30 to 11:00 - PSE Campus, Room R1-13

    The detailed schedule of all the CLASSES (times and rooms) is attached below.

    E-mails: ,

    Course in English - First Semester 2023/2024

    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 and financial markets, such as externalities, increasing returns to scale and incomplete 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

    Duration: 18 hours, from Monday, September 11 to Monday, November 6, 2023.

    Mode of evaluation: attendance, homeworks & presentation of selected research articles and written exam.


    - An overview of general equilibrium theory; main results.

    - Competitive equilibrium with externalities; basic results.

    - Externalities and market failure; perfect internalization, Pareto improving policies.

    - Externalities in production economies; increasing returns to scale; marginal pricing rule.

    Part on "General equilibrium and Financial Markets"- Jean-Marc Bonnisseau

    Duration: 18 hours, from Monday, November 6 to Monday, December 18, 2023.

    Mode of evaluation: attendance, homeworks & presentation of selected research articles and/or written exam.


    - 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)".

  • Part II: Financial markets


    * Arrow, K.J., Hahn, F., General competitive analysis. Holden-Day, San Francisco (1971)

    * Balasko Y., Foundations of the Theory of General Equilibrium. Academic Press (1988)

    * Balasko, Y., Economies with price-dependent preferences. Journal of Economic Theory 109, 333-359, (2003)

    * Balasko, Y., Wealth concerns and equilibrium. Journal of Mathematical Economics, Elsevier, vol. 59(C), 92-101 (2015)

    * Bonnisseau, J.M., and Cornet, B., Existence of equilibria when firms follow bounded losses pricing rules. Journal of Mathematical Economics, 17 (1988), 119-147

    * Bonnisseau, J.-M., del Mercato, E.L., and Siconolfi, P., Existence of an equilibrium in Arrowian markets for consumption externalities, Journal of Economic Theory 209, 1-17 (2023)

    * Bonnisseau, J.-M., del Mercato, E.L., Externalities, consumption constraints and regular economies. Economic Theory 44, 123–147 (2010)

    * Coase, R., The Problem of Social Cost. Journal of Law and Economics, vol. 3, 1-44 (1960)

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    * Cornet B., Tarification au coût marginal et Pareto optimalité, Mélanges économiques. Essais en l'honneur d’Edmond Malinvaud, P. Champsaur et al (eds.), Economica, Paris (1988), 29-70. Translated as: Marginal Cost Pricing and Pareto Optimality, Essays in Honor of Edmond Malinvaud, P. Champsaur et al (eds.), The M.I.T. Press, Cambridge (1990)

    * Debreu G., Theory of value. Cowles Foundation Monographs Series (1959)

    * Dufwenberg, M., Heidhues, P., Kirchsteiger, G., Riedel, F., and Sobel, J., Other-regarding preferences in general equilibrium. Review of Economic Studies, 78(2), 613-639 (2011)

    * del Mercato, E.L., Existence of competitive equilibria with externalities: A differential viewpoint. Journal of Mathematical Economics 42, 525–543 (2006)

    * del Mercato, E.L., and Nguyen, V.-Q., Sufficient conditions for a "simple" decentralization with consumption externalities, Journal of Economic Theory 209, 1-17 (2023)

    * del Mercato, E.L., Platino, V., Private ownership economies with externalities and existence of competitive equilibria: A differentiable approach. Journal of Economics 121(1), 75-98 (2017)

    * del Mercato, E.L., Platino, V., On the regularity of smooth production economies with externalities: Competitive equilibrium à la Nash. Economic Theory 63(1), 287-307 (2017)

    * Florenzano M., General Equilibrium Analysis: Existence and Optimality Properties of Equilibria. Springer (2005)

    * Geanakoplos, J.D., Polemarchakis, H.M., Existence, regularity and constrained suboptimality of competitive allocations when the asset market is incomplete. In: Starrett, D., Heller, W.P., Starr, R.M. (eds.) Uncertainty, Information and Communication: Essays in Honor of K. J. Arrow, vol. III, pp. 65–96. Cambridge University Press, Cambridge (1986)

    * Geanakoplos, J.D., Polemarchakis, H.M., Pareto improving taxes. Journal of Mathematical Economics 44, 682–696 (2008)

    * Geanakoplos, J.D., Magill, M., Quinzii, M., Drèze, J., Generic inefficiency of stock market equilibrium when markets are incomplete. Journal of Mathematical Economics 19, 113–151 (1990)

    * Laffont, J.-J., Decentralization with externalities. European Economic Review 7, 359–375 (1976)

    * Laffont, J.-J., Fundamentals of Public Economics. John and Helene Brown, translators, MIT Press, Cambridge (1988)

    * McKenzie, L.W., Competitive equilibrium with dependent consumer preferences. In: Proceedings of the Second symposium of linear programming, Washington, DC, 277–294 (1955)

    * Mas-Colell, A., The Theory of General Economic Equilibrium, a Differentiable Approach, Econometric Society Monograph (1990)

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

    * Magill, M., and Quinzii, M., Theory of Incomplete Markets. MIT press (2002)

    * Shafer, W., Sonnenschein, H., Some theorems on the existence of competitive equilibrium. Journal of Economic Theory, vol. 11(1), pages 83-93 (1975)

    * Shafer, W., Sonnenschein, H., Equilibrium with Externalities, Commodity Taxation, and Lump Sum Transfers. International Economic Review, 17(3), 601-11 (1976)

    * Smale, S., Global analysis and economics. In: Arrow, K., Intriligator, M. (eds.) Handbook of Mathematical Economics, vol. I, Chap. 8, pp. 331–370. Amsterdam: North-Holland (1981)

    * Tallon, J.M., Equilibre général : Une introduction. Vuibert (1997)

    * Villanacci, A., Carosi, L., Benevieri, P., Battinelli, A., Differential Topology and General Equilibrium with Complete and Incomplete Markets. Kluwer Academic Publishers (2002)