Reform Without Losers: An Interpretation of China's Dual-Track Approach to Transition

Lawrence J Lau, Yingyi Qian and Gérard Roland

No 1798, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We develop a simple model to analyse the ‘dual-track’ approach to transition to a market economy as a mechanism for implementing efficient Pareto-improving economic reform, that is, reform achieving efficiency without creating losers. The approach, based on the continued enforcement of the existing plan while simultaneously liberalizing the market, can be understood as a method for making implicit lump-sum transfers to compensate potential losers of the reform. The model highlights the critical role of enforcement of the plan and full liberalization of the market track. We examine how the dual-track approach has worked in product and labour markets in China’s economic reform in practice.

Keywords: China; Dual-track price liberalization; Pareto-improving economic reforms; political restraints; Transition (search for similar items in EconPapers)
JEL-codes: D50 D60 P21 P22 P41 (search for similar items in EconPapers)
Date: 1998-03
References: Add references at CitEc
Citations: View citations in EconPapers (25)

Downloads: (external link)
http://www.cepr.org/active/publications/discussion_papers/dp.php?dpno=1798 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:1798

Ordering information: This working paper can be ordered from
http://www.cepr.org/ ... ers/dp.php?dpno=1798

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().