An economic analysis of 'home appliances going to the countryside' in China.

This paper explores the impacts of home appliances going to the countryside ( HAGC) in a spatial general equilibrium model. Main findings include the following: ( i) if the manufactured goods are highly differentiated, HAGC reduces the urban-rural real income gap and improves the social welfare; ( ii) if there exists rural-urban migration, the change in the social welfare due to HAGC will experience a U-shaped curve as transportation cost decreases; and ( iii) when the manufactured goods are highly differentiated, or fairly standardized under either very high or low transportation cost, price subsidy should be expanded to all manufactured goods. Otherwise, the optimal policy is laissez-faire. [ABSTRACT FROM AUTHOR]