The Reforms of Shang Yang

Shang Yang is regarded as the chief architect of the Chinese state. This paper analyzes the reforms of Shang Yang in a mathematical model. The existence of institutional complementarity between the adoption of the county form and the use of strong incentives for soldiers is established. An increase in the level of external threats induces the ruler to adopt stronger incentives for soldiers and to choose a higher degree of adopting the county form. An increase in the power of clans leads the ruler to choose a lower incentive for soldiers and a lower level of adopting the county form.