Integrating Partial and General Equilibrium Perspectives in Modelling Demand Functions: A Comparative Analytical Framework

This paper aims to construct a conceptual and comparative analytical model that incorporates a Partial Equilibrium (PE) and General Equilibrium (GE) models in the modelling of demand functions. While PE and GE models share microeconomic foundations, they have developed as paradigms with divergent assumptions, scope of analysis and epistemological commitments. Partial equilibrium analysis gives in depth behaviour in the market which is isolated but fails to consider inter-market feedbacks and systemic interconnectedness. In contrast, general equilibrium models are able to attain consistency at the economy-wide level but tend to sacrifice empirical adaptability and behavioural realism. Drawing on a conceptual analysis approach, this study interrogates the theoretical foundations, methodological tensions, and complementarities between the two traditions. It proposes a continuum of equilibrium closure - a unifying framework that situates PE and GE models along a spectrum defined by the degree of endogeneity, feedback intensity, and market interdependence. This framework bridges the micro–macro divide by linking behavioural demand specifications with systemic feedback mechanisms, allowing analysts to model conditional equilibrium outcomes. Using illustrations from agricultural economics, the paper demonstrates how hybrid equilibrium modelling enhances policy relevance by capturing both sector-specific responses and economy-wide repercussions. The framework contributes theoretically by redefining equilibrium as a conditional construct, introducing feedback intensity as a measurable parameter, and formalizing comparative equilibrium diagnostics as a methodological tool. The study concludes that integrating partial and general equilibrium approaches is not only feasible but necessary for a more comprehensive understanding of demand dynamics and policy transmission in complex, interdependent economies.