Abstract There is a broad consensus that factor price system and its determining mechanism is distorted in China. As proved by general equilibrium theory, market mechanisms allocate resources by price signals and the equilibrium price system is determined by optimal exchange rate or price relations. So it is the relative price rather than the absolute price that is more important. The variation of relative price is the key factor to identify the rationality of price system. This paper is based on a great deal of data and uses the historical method to examine the historical data of price determining mechanism and price adjustment in some major developed countries during the Industrial Revolution and tries to find the disciplines in it, through which we expect to provide some referential international experiences for China.
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Received: 18 November 2008
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Corresponding Authors:
HAO Feng
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