A partial equilibrium is a special case of the general economic equilibrium, where the clearance on the market of some specific goods is obtained independently from prices and quantities demanded and supplied on other goods' markets. In economics, economic equilibrium often refers to an equilibrium in a market that clears: this is the case where a market for a product has attained the price where the amount supplied of a certain product equals the quantity demanded. ...
History
Whereas Walras' mathematic theorizing formalized the idea of a one-period economic equilibrium of the general economic system, Marshall's works tried to inquire the partial case of that economic system. So, Walras stands for the father of all GEE frameworks in economics, while Marshall authored the first partial one.
In economics, economic equilibrium often refers to an equilibrium in a market that "clears": this is the case where a market for a product has attained the price where the amount supplied of a certain product equals the quantity demanded.
The concept of equilibrium is also applied to describe and understand other sub-systems of the economy that do not follow the logic of supply and demand, for example, population growth.
This example is also partialequilibrium, while equilibrium may be multi-market or general.
Partialequilibrium analysis is adequate when the first-order effects of a shift in, say, the demand curve do not shift the supply curve.
Some of the recent work in general equilibrium has in fact explored the implications of incomplete markets, which is to say an intertemporal economy with uncertainty, where there do not exist sufficiently detailed contracts that would allow agents to fully allocate their consumption and resources through time.
While the issues are fairly technical the basic intuition is that the presence of wealth effects (which is the feature that most clearly delineates general equilibrium analysis from partialequilibrium) generates the possibility of multiple equilibria.
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