Dual track reforms: With and without losers
The dual track approach to market liberalization has been widely recognized as the key to the success of the Chinese economic reform. In this paper we study the effectiveness of this strategy in economic environments where the status quo government control is incomplete. We show that in a dynamic context intertemporal arbitrage will emerge, potentially resulting in efficiency losses and/or adverse distributional effects. Only when the status quo involves both price and quantity interventions by the government can dual track liberalization maintain its appeal. Our analysis thus suggests some caution as for the broader applicability of this reform mechanism.
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- Lau, Lawrence J. & Qian, Yingyi & Roland, Gerard, 1997.
"Pareto-improving economic reforms through dual-track liberalization,"
Elsevier, vol. 55(2), pages 285-292, August.
- Lawrence J. Lau & Yingyi Qian & Gerard Roland, . "Pareto-Improving Economic Reforms through Dual-Track Liberalization," Working Papers 97007, Stanford University, Department of Economics.
- Lau, Lawrence J & Qian, Yingyi & Roland, Gérard, 1997. "Pareto-Improving Economic Reforms through Dual-Track Liberalization," CEPR Discussion Papers 1595, C.E.P.R. Discussion Papers.
- Jiahua Che & Giovanni Facchini, 2004.
"Dual Track Liberalization: With and Without Losers,"
William Davidson Institute Working Papers Series
2004-661, William Davidson Institute at the University of Michigan.
- Jiahua Che & Giovanni Facchini, 2004. "Dual Track Liberalization: With and without losers," Econometric Society 2004 Latin American Meetings 123, Econometric Society.
- 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.
- 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.
- Kevin M. Murphy & Andrei Shleifer & Robert W. Vishny, 1992. "The Transition to a Market Economy: Pitfalls of Partial Reform," The Quarterly Journal of Economics, Oxford University Press, vol. 107(3), pages 889-906.
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