János Kornai's pioneering scholarship examined the mechanisms of the socialist system. Following the collapse of the Soviet Union, Kornai's main focus was on the transition process in former socialist countries in central Eastern Europe. This paper builds on Kornai's work on the socialist system by analyzing horizontal bargaining within every political branch in contemporary China. I argue that this horizontal bargaining within the party is enhanced by the vertical bargaining. Incorporating Kornai's work on socialism, the “party chief and mayor” template extends the bargaining model from one key figure and one group in the “king and council” template to two key figures and their respective confidants. In addition, it incorporates institutional constraints into the graphical model. It also defines a “collective decision probability function,” which shows how the party chief and mayor model reaches “checks and balances” that limit the policy space, regardless of whether the policy is exogenous or endogenous.
