shortages). The black market is the only place where supply and demand equalize, with a big difference between official and black market prices.

In most countries the liberalization of price was typically done in several steps. One important feature is that it started as the adjustment of increased agricultural prices. This had the effect of raising agricultural production, and is thought to be one of the reasons for the initial success of reform. Also the use of a dual-track (two-tier) price system is one feature that characterizes the reform process. The gradual approach has its costs, the most significant of which is a heavy fiscal burden. Since there were liberalized and controlled prices within the economy at the same time, the distortion of relative prices could be large, thus increasing the subsidies.

## Cambodia

Though all prices were controlled under the Heng Samlin administration, the free (black) market existed. The government raised the prices of farm products in 1989 but were not yet liberalized. The price of agricultural products were completely liberalized in 1992 but those of manufactured goods were not liberalized.

## China

Price reform was first implemented as a form of raising the purchase price of agricultural products. Although the price structure was adjusted to reduce price distortion, the government still retained the controlling power of price. The dual-track pricing system was then introduced, in which a pre-determined quantity of products are purchased by the government at planned price, while the excess is traded at market price. This system was very effective in advancing reform. Step by step, the role of the market became larger and more important in Chinese economy. There were some retreats in price reform during the period 1989-1991, with a revival of price control on goods formerly freed, because of high inflation. With the reacceleration of reform after 1992, price restrictions were again released. Although dual-track pricing still remains today, market-determined prices play a more important role in the economy.

## Laos

Before the New Economic Mechanism during the period of 1985-1987, the government was giving guidance to public enterprises to calculate the prices of their products using the cost-plus pricing system. But this produced many disadvantages, namely the tendency of public enterprises to increase their cost of production, thus creating inefficiency and high prices. In 1988, it was decided that all prices of goods and services were to be market-determined, except for a small number of strategic goods including electric power, potable water, postal and telecommunication, some mineral products, air passengers and air freight. Mongolia

The first round of liberalization of price was carried out at the beginning of 1991, with roughly 60 percent of the price of goods and services free. Farm gate prices were increased by 30-70 percent, while fixed wholesale prices were adjusted by 55 percent. All the retail and wholesale prices, with the exception of 35 commodity groups, were freed. The second step in price liberalization was taken in October 1991. The number of goods subject to price control at the retail level was reduced to 17. Energy prices, rents and tariffs for public utilities and services remained under control. The third and fourth steps in price liberalization occurred