Applying economic sociology to understand the meaning of “Quality” in food markets Gilles Allaire ∗ Abstract This article reviews the concept of the “market” and questions the standard view of the “market” developed by orthodox economic theory. The article highlights how Economic Sociology and Convention Theory is more useful in understanding markets and appreciating markets as social constructs, which are governed by institutions and social orders. This adjustment in the analytical framework to study markets and especially food markets, is useful in unpacking the various dimensions of “quality” in food products and illustrating that “quality” is an institution that is shaped by society and by culture. JEL classifications: A13, L15, Q19 Keywords: Economic sociology; Markets; Institutions; Food quality; Standards; Conventions 1. Introduction The word “market” covers a wide range of organi- zations and institutions enabling markets to function (e.g., enterprises, marketplaces, information on prices, legal guaranties) on the one hand, and on the other hand it is reduced to abstract mechanisms (supply and demand model). Variety in the theory of markets is largely prohibited by the fixation on the assumption of perfect competition. New ways to think about mar- kets introduced by Chamberlin (markets as local mo- nopolies), by Coase (the existence of transaction costs in markets), by Austrian economics (markets as pro- cesses of discovery of efficient designs), or by evo- lutionary economics (the market as influencing inno- vation), were broadly regarded as heterodoxies, while empirical marketing studies were developing within management sciences, but not integrated in a consis- tent economic theory. ∗ INRA Toulouse, France. Following the seminal work of Akerlof (1970) and Grossman and Stiglitz (1980) it is now well established that information is not perfect and that information is costly. Furthermore, markets cannot exist if there is both “uncertainty” (for the search of information is po- tentially infinite), and “transparency” of information (for there is nothing to know). No economist will ar- gue that information is as perfect as supposed in the orthodox theory and all accept the existence of “market failures” and the idea that institutions shape economic life. Economists, such as Stiglitz (2001), stress that a small imperfection can have profound consequences on the nature of the economic equilibrium; and Stiglitz argues that if a theory of equilibrium were including ad- equate institutions to fill in market failures, it still will be a “fundamentalist” view. A positive view implies to address duration and stabilization issues, questions which do not interest economists in the pure tradition. Instead, institutional economics and economic sociol- ogy are related with the processes of building market institutions. c  2010 International Association of Agricultural Economists