Working Papers Home

2015 Working Papers
2014 Working Papers
2013 Working Papers
2012 Working Papers
2011 Working Papers
2010 Working Papers
2009 Working Papers
2008 Working Papers
2007 Working Papers
2006 Working Papers
2005 Working Papers
2004 Working Papers
2003 Working Papers
2002 Working Papers
2001 Working Papers
2000 Working Papers

Search All Papers

JEL Classification

Past Working Papers (Prior to 2000)

Office of Research
Home Page

Information on
Submitting a Paper

"Dual track liberalization: with and without losers"

Jiahua Che and Giovanni Facchini


First Author :

Jiahua Che
University of Illinois
1206 S. Sixth Street, M/C 706
Champaign, IL 61820

(217) 333-4580

Create New

Second Author :

Giovanni Facchini
University of Illinois
1206 S. Sixth Street, M/C 706
Champaign, IL 61820

(217) 265-0644

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 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.
JEL Classification : P2 , F1
Footnotes & Acknowledgements :
We would like to thank Dan Bernhardt, Hadi Esfahani, Earl Grinols, Eli Katz, Jan Svejnar, Bart Taub, Cecilia Testa, Thierry Verdier, Wei Yin Zhang, Li An Zhou and seminar participants at the ERWIT CEPR meeting in Bern, the Midwest International Economics Meetings in Pittsburgh, SAET VI conference in Rhodes, Beijing University, the University of Illinois and University of Leipzig for useful comments.
Manuscript Received : 2004
Manuscript Published : January 21, 2004
This abstract has been viewed 4238 times.
Click here to view the full text of this paper.