According to Elroy Dimson and Massoud Mussavian (1999), Arrow-Debreu model originated as a model of general equilibrium that has been fundamental to economics and money. Compared to earlier models, the Arrow-Debreu model quite simply generalized the idea of a item, differentiating commodities by time and place of delivery. For example, "apples in Malaysia in July" and "apples in Singapore in June" are believed as different commodities.
Kenneth J. Arrow (1951) and Gerard Debreu (1951) work together to produce the first rigorous proof the existence of a market clearing equilibrium, given certain restrictive assumptions. This field of research has had a profound impact not only on economic science, but also on financial markets, institutions and businesses all around the globe. It often used as an over-all research for other microeconomic models.
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