The Effects of Reforming the Chinese Dual-Track Price System



Hence, substituting for dp from (13), we have

dv
dp


-vmx


S - xp

S (x x)xm xp


< 0.


Similarly, assuming p > p and vm > 0, it is found that

dv
dx


vm


dp

, (x
dx


x) + (p p)


= vm(p p)


S xp

S (x x)xm xp


> 0.


Proposition 5

Differentiating (17) w.r.t. p yields

dP    x + χ p

dp     x1 x1


p + (1


x) dp
x17 j dpi


(25)


dP
dx
)


a
x
1


— —

(p p) + [α-pp ⅛ + (1

x1 p p


x d j dp
x
1 dx)


(26)


Substituting for dp from (13) and using x = xs > x1, we obtain

dP αXx £aS1 + (1 α)S2 (1 α)x2xm xp ax((xs x1)]
dpi          α[S1 x1m(x1 x)] + (1 α)(S2 x2x) xp

Similarly, substituting for dp from (14), we have

29



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