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Abstract
Experiences since structural adjustment in China's
agricultural sector suggest that the portion of the market which
has been deregulated shows considerable economic rationality among
the major actors in the market. Data used were generated during a
period when China was following a gradual approach to the
liberalization of markets, and the results suggest that the
approach has merits for freeing agricultural markets. On the
supply side, producers have been price responsive in supplying the
free market, and a major institutional adjustment in the
organization of farms indicates that fewer distortions have led to
increased outputs for the market. On the demand side, home produced
foods for rural consumer and rationed foods for urban consumer
substitute for free-market goods. The income elasticity for food
in the free market is more elastic in rural than in urban
households as one would expect, since rural incomes are
approximately one-half those of urban dwellers.