Dual Track Liberalization: With and Without Losers

Jiahua Che () and Giovanni Facchini

Working Papers from University of Illinois at Urbana-Champaign, College of Business

Abstract: Dual 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 efficiency 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.

JEL-codes: F10 P20 (search for similar items in EconPapers)
Date: 2004-01
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Related works:
Working Paper: Dual Track Liberalization: With and without losers (2004)
Working Paper: Dual Track Liberalization: With and Without Losers (2004)
Working Paper: Dual Track Liberalization: With and Without Losers (2004)
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