Dual Track Liberalization: With and Without Losers
AbstractDual track liberalization, relying upon the continued enforcement of existing contracts and the simultaneous creation of a free market sector, represents a powerful mechanism in economic reform. If not anticipated, the reform implements an outcome that is both Pareto improving and e±ciency enhancing as compared to the status quo. We show that when the reform is anticipated, intertemporal arbitrage arises potentially undermining these properties. Only when the original policy involves both price setting and quantity restrictions can anticipated dual track liberalization maintain its attractiveness. These conditions correspond well to the circumstances faced by transition economies.
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Bibliographic InfoPaper provided by William Davidson Institute at the University of Michigan in its series William Davidson Institute Working Papers Series with number 2004-661.
Length: 31 pages
Date of creation: 01 Feb 2004
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Dual Track Liberalization; Intertemporal Arbitrage; Pareto Improving Reforms; China;
Other versions of this item:
- Jiahua Che & Giovanni Facchini, 2004. "Dual Track Liberalization: With and without losers," Econometric Society 2004 Latin American Meetings 123, Econometric Society.
- Jiahua Che & Giovanni Facchini, 2004. "Dual Track Liberalization: With and Without Losers," William Davidson Institute Working Papers Series 2004-669, William Davidson Institute at the University of Michigan.
- Che, Jiahua & Facchini, Giovanni, 2004. "Dual Track Liberalization: With and Without Losers," Working Papers 04-0100, University of Illinois at Urbana-Champaign, College of Business.
- P2 - Economic Systems - - Socialist Systems and Transition Economies
- F1 - International Economics - - Trade
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