Price Liberalization in a Reforming Socialist Economy: A Search Equilibrium Approach
June 1, 1992
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Summary
A bilateral search model of the commodity market is formulated to study the effects of liberalizing prices in a reforming socialist economy. The main result is that if the competitive structure of the economy is not quickly modified to eliminate supply rents, price liberalization may be accompanied by substantial output losses. A role for tax policy in limiting output losses is identified.
Subject: Consumption
Keywords: constant returns to scale, lump sum, market economy, price liberalization, WP
Pages:
30
Volume:
1992
DOI:
Issue:
044
Series:
Working Paper No. 1992/044
Stock No:
WPIEA0441992
ISBN:
9781451846379
ISSN:
1018-5941
