Abstract
China’s price reform has been progressing through the mandatory quota (MQ) and dual-track schemes; a unique characteristic of China’s gradualist approach to economic transition. The purpose of this paper is to show how MQ properly modified, has been a bridge from a planned to a market-oriented price system. We analyze six criteria: industry output, average price, excluded buyers, buyers’ surplus, producers’ surplus and deadweight loss (not necessarily all independent) in our welfare comparison of a competitive market, monopoly and MQ form of market structure. A more general analytic formulation of our model and a graphic representation of the process are shown in the Appendix.KeywordsMarginal CostMarginal RevenueDeadweight LossComparative EconomicPrice ReformThese keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.
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