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102 Minn. L. Rev. 1563 (2017-2018)
Taobao, Federalism, and the Emergence of Law, Chinese Style

handle is hein.journals/mnlr102 and id is 1615 raw text is: Article Taobao, Federalism, and the Emergence of Law, Chinese Style Lizhi Liu* & Barry R. Weingastt INTRODUCTION When a startup in the West invents a new form of consumer electronics and creates a website from which to sell its products, all of national law stands behind it, helping to reduce various forms of fraud, theft, and encroachment on intellectual property. Similarly, disputes that arise between the firm and its custom- ers, suppliers, or competitors are negotiated in a rich legal and commercial environment. Because China lacks a strong legal in- frastructure,1 a similar venture attempting to sell by website is far riskier. The inchoate, variable, and sometimes corrupt na- ture of the Chinese legal system makes the prevention and res- olution of legal problems much harder.2 Chinese startups and small and medium firms that sell products by their own website are considerably more vulnerable than similar ventures in Eu- rope or the United States. * Ph.D. Candidate, Department of Political Science, Stanford University, lizhiliu@stanford.edu. t Senior Fellow, Hoover Institution, and Ward C. Krebs Family Profes- sor, Department of Political Science, Stanford University, weingast@stan- ford.edu. The authors gratefully acknowledge helpful comments from Isa Camyar, Rouying Chen, Kevin Davis, Richard Epstein, Roderick Hill, Stephan Haggard, Haifeng Huang, Hanzhang Liu, Xiao Ma, Jean Oi, Wendell Pritchedtt, Shitong Qiao, Weiyi Shi, Susan Shirk, Andrew Walder, Yuhua Wang, Xun (Brian) Wu, Yang Xie, Chenggang Xu, Guanghua Yu, Ming Zeng, Qi Zhang, Xueguang Zhou, and participants at several seminars and conferences. All errors are our own. Copyright 0 2018 by Lizhi Liu and Barry R. Weingast. 1. See SuSAN L. SHIRK, THE POLITICAL LOGIC OF ECONOMIC REFORM IN CHINA 1-7 (1993) (discussing the government's persistent refusal to create legal institutions in China). 2. Id. 1563