'Professor Zeng's insightful analysis of SOEs highlights the critical role that law and legal institutions can play in shaping state and private ownership. A particular contribution is his consideration of the underexplored concept of regulatory costs, demonstrating how contractual limitations and the incompleteness of the law, among other factors, can influence the choice between SOEs and private ownership. In doing so, Professor Zeng provides a nuanced framework in which to understand the trade-offs between state ownership and public regulation, and demonstrates that the choice between public and private ownership is often shaped by the structure and stability of the law and legal institutions. Professor Zeng's analysis is particularly compelling in its application to China, providing a sector-specific review of SOEs and offering new insight into why SOEs are dominant in some industries while private enterprise thrives in others. In the end, beyond SOEs, Professor Zeng's analysis is a prescription for what China must do to encourage further private ownership. As he explains, the cost of replacing state ownership with a formal legal and regulatory system may be substantial. Nevertheless, he provides a compelling argument for why China must commit to doing so if it chooses to promote further private investment.' Charles K.

Whitehead, Myron C. Taylor Alumni Professor of Business Law, Cornell Law School.