The Effects of Reforming the Chinese Dual-Track Price System

dP
dx

—a(^p-^ρ) £aS¹ + (1 — α)S² — (1 — α)x²xmm — xp — αxⁱ_m(x^s — x^r)]
α[S^r — xm_m(x^r — x)] + (1 — α)(S² — x²xmm) — x^s_p

< 0.

Proposition 6

For a type-1 household, using Roy’s identity,

dv¹ ₁ dp ₁

=V = vPF ⁺ vm
dp ^p dp

($ — 1)

dp ₁

— (x — x) + x
dp

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

d¹dpx

1
_m¹ xx

αx¹_m (x¹ — xx)
∆

We have seen in the text

that

ifx¹ <x² ,then∆ < 0.

Using this with the

assumption in case 1, that

x¹

x ≤ 0, it is seen here that ^dV¹ < 0.
— ’ dp

Similarly,

d¹

=v = v
dx

α(x¹

(p — ^rx) χ +--

r∖ rp¹x)x_m

and so ^dV¹ > 0.
dx

Likewise, for a type-2 household, as Proposition 3 holds, that is dp < о < dp,

dv²dpx

—_m² x²

dp
dpx

dv²о;

2 2 ^dpvm x 5=
dx

< 0.