November 1997 <p> This paper has been revised as Stanford Economics Working Paper 99-010.

This paper develops a simple model to analyze the "dual-track" approach to market liberalization as a mechanism for implementing efficient Pareto-improving economic reform, that is, reform achieving efficiency without creating losers. The approach, based on the continued enforcement of the...

Pareto-improving economic reforms that also simultaneously achieve efficiency can be implemented through a strategy of "dual-track" liberalization. Its success requires the feasibility of the original plan and its continued enforcement by the state. The Chinese experience demonstrates that such...