General Equilibrium Models with Rationing : The Making of a 'European Specialty'

Europe was where research on general equilibrium models with rationing (GEMR) gained traction. The goal of our article is to explain how and why. We show that research on GEMR took off and developed in France and Belgium from the mid-1970s before expanding all around Europe. We also show that three factors contributed to the deployment of GEMR across Europe. First, GEMR opened up new research perspectives in microeconomics, macroeconomics, and econometrics. Second, leading figures not only advocated for GEMR but also had the institutional resources to stimulate new research. The most well-known example is Drèze, at the Center for Operations Research and Econometrics. Our article also reveals the influence of Pierre-Yves Hénin at Paris I University, Werner Hildenbrand at the University of Bonn, and Jean-Jacques Laffont at Toulouse School of Economics. Third, there were problems specific to the Old Continent that stimulated the use of GEMR, namely persistent unemployment in Western Europe and planning in Eastern Europe