The Effects of Reforming the Chinese Dual-Track Price System

—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

Proposition 6

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

dv¹     ₁ dp     ₁

=V = vPF ⁺ vm
dp    ^p dp

dp ₁

— (x — x) + x
dp

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

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

Similarly,

and so ^dV¹ > 0.
dx

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

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