Prices as social facts: A sociological approach to price setting

Abstract This article examines the issue of prices from a sociological standpoint. We show that, contrary to popular belief, price setting is always the result of social practices. We identify two main perspectives in the relevant literature. The first deals with the central notion of quality: price setting is a matter of judgement, arbitration and equipment. The second focuses on measurement practices, such as valuation and pricing, which occur before or during the transaction. These two complementary perspectives reveal a variety of processes that both determine prices and can be used to construct a typology based on two criteria: the moment of price setting, and the level of competition. Four different types of pricing mechanisms are distinguished: self-regulated, administered, composed, and bargained. We use examples to describe these different pricing types, and to show how such an approach contributes to our understanding of the economy.