The Effects of Reforming the Chinese Dual-Track Price System



track ration x, while a type-2 household is allocated no ration at all. We also allow
for different endowments of Y being held by the two types.

The representative type-1 household faces the problem

max U (x1, y1)
x1,y1

subject to px1 + y1 y1 + (p p)x m1,              (9)

where y1 is its endowment of Y. Unlike in (1), the budget line is not kinked.
Because resale is possible, household
1 can be thought of as always selling its
entire plan-track allocation to gain the implicit subsidy
(p p)X, and then buying
the amount it wishes to consume. The implicit subsidy is a component of its full
income
m1 .

The problem for the representative type-2 household is

(10)


max U (x2, y2)
x2,y2

subject to px2 + y2 y2 m2.

Because a type-2 household does not receive a plan-track allocation of X , its full
income m
2 is simply its endowment y2.

18



More intriguing information

1. Imputing Dairy Producers' Quota Discount Rate Using the Individual Export Milk Program in Quebec
2. ISO 9000 -- A MARKETING TOOL FOR U.S. AGRIBUSINESS
3. Geography, Health, and Demo-Economic Development
4. The name is absent
5. Opciones de política económica en el Perú 2011-2015
6. Road pricing and (re)location decisions households
7. The InnoRegio-program: a new way to promote regional innovation networks - empirical results of the complementary research -
8. Effort and Performance in Public-Policy Contests
9. Exchange Rate Uncertainty and Trade Growth - A Comparison of Linear and Nonlinear (Forecasting) Models
10. HACCP AND MEAT AND POULTRY INSPECTION