Weak central government, strong legal rights: the origins of divergent legal institutions in 18th-century Chinese and Japanese rice markets

Our model predicts that strong central governments (equivalent to central government with higher θ, k and f in the model) are less likely to offer legal protections (Result 3 & 4) than weak central governments (equivalent to central government with weak θ, k and f in the model). Moreover, a high level of legal protection leads to more participation and cooperation of the mid-level agent in the market (Results 1 & 2).^{Footnote 26}

In the following section, we turn to historical empirical evidence to support our model. We first discuss the strengths and weaknesses of Qing China and Tokugawa…