The grain rationing system in China was imposed by the People's Republic of China in the 1950s to control the production of food and to boost industrialization. People were given grain coupons with which they could buy a certain amount of grain at a low, state-imposed price, which varied somewhat with age, profession and location. Any quantity exceeding the coupon quota would have to be purchased at market price. Urban households in China therefore face a kinked budget constraint line. With this system, urban households were able to buy grain at a cheaper price, and at the same time rural areas, once they fulfilled the state-imposed quotas, were allowed to sell the excess supply at market price.


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