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Pistor develops a conceptual framework for the analysis of legal institutions. She argues that law is inherently incomplete and that the incompleteness of the law has a profound impact on the design of lawmaking and law enforcement institutions. When law is incomplete, residual lawmaking powers must be allocated; and enforcement agents have to be vested with law enforcement powers. The optimal allocation of lawmaking and law enforcement powers under incomplete law is analysed with a focus on the legislature, regulators and courts as possible lawmakers, and courts as well as regulators as possible law enforcers. Pistor argues that the optimal allocation of residual lawmaking and law enforcement powers is determined by the degree and nature of incompleteness of law, the ability to standardise actions that may result in harm, and the magnitude of harm and externalities expected from such actions. Under highly incomplete law, regulators are superior to courts when actions can be standardised and, if allowed to proceed, may create substantial externalities. Otherwise, courts are optimal holders of lawmaking and law enforcement powers. Pistor applies this analytical framework to the development of financial market regulation in England since the mid 19th century, with comparative reference to the developments in the United States and Germany.