Abstract
In the process of China’s economic reform, dual-track approach becomes an institutional characteristic of incrementalism. From the theoretical views of property rights and transaction costs, the authors try to clarify the meanings of dual-track approach for housing market, and the barrier it causes in merging two different systems. The authors notice that larger group of overseas home buyers and the political pressure from entering WTO will raise the possible cost for dual-track system. Accordingly, an institutional change is necessary when the cost of the dual-track system is much more than its benefit. Since housing value is affected by many variables, such as location, criminal rate, public service and job opportunity…etc., housing reform requires institutional support from other sectors as well. As a result, the authors conclude that Shanghai’s housing reform has not accomplished yet. Canceling the dual-track system does not end up Shanghai’s housing reform.