A general model of derived demand linkages in terms of technological interdependence of both the segments -modern and traditional- of a dual economy is developed.

The present paper illustrates the coordination problem with a standard two-person non-cooperative gae, with yields two Nash equilibria in pure strategies, one of which is Pareto dominated by the other.

The structure of this paper is as follows: Scetion I is the an introduction. Section II provides an analysis of the initial condition of the former CPEs on the brink of transformation, and suggests why standard macroeconomic stabilisation policies may not be appropriate. section III records and...