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《Economic Research Journal》 2002-01
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Reputational Foundation of the Legal System

Zhang Weiying (Guanghua School of Management, Beijing University)  
Law and reputations are two principal mechanisms of market orders. Reputations are self-enforcing and more cost-effective as compared with law. In many occasions, law is helpless and only reputations can play a role. Furthermore, both the legal judgement and the legal enforceability rely on the reputational concerns of the parties involved. When people do not care for their reputations, law cannot be effective.In the commercial circle, the firm is assumed as a reputation bearer. The lack of reputational concerns of Chinese enterprises root in the insecurity of property rights and the governmental interventions. Reputations of law enforcers are also crucial for the legal system. For law enforcers to have incentives to build up their reputations, it is necessary to introduce competition into the judicial system.
【CateGory Index】: D90
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