Market-preserving federalism is a special type of federalism that limits the degree to which a country’s political system can encroach upon its markets. Weingast notes that there is a fundamental dilemma facing a government attempting to build and protect markets: the government must be strong enough to protect property rights and enforce contracts, but not strong enough to credibly commit the state to honoring such rules.
Read more about Market-preserving Federalism: Conditions For Market-preserving Federalism