GOOD MORNING

AND
NAMASTE

“Just one small positive thought in the morning can change your whole
day.” — Dalai Lama
PRICE, AUTHORITY, AND
TRUST
 PRICE
Price is the value that is put into a product or service. A pricing
strategy takes into account segments, ability to pay, market conditions,
competitor actions, trade margins amongst others. Prices provide
crucial points of orientation for actors in market exchange that make
heteregenous objects and services commonsureable. Price is not simply
a matter of economic calculation, but is also influenced by social
factors such as status, prestige, and cultural meaning.
 IMPORTANCE OF PRICE IN
SOCIOLOGY
The concept of price is important in sociology because it helps us understand the social
and cultural factors that influence the value of goods and services in a given society. Here
are some ways in which price is significant in sociology:

Reflects social and cultural values: The price of a product or service can reflect the
underlying values, beliefs, and norms of a culture. For example, the price of organic food
may be higher than non-organic food because of the cultural value placed on healthy and
sustainable living.

Impacts social status: The price of goods and services can also impact social status and
identity. For example, owning a luxury car or designer clothing can be a symbol of high
social status and prestige.
 IMPORTANCE OF PRICE IN
SOCIOLOGY
Shapes social inequality: Price can contribute to social inequality by creating barriers
to access for certain goods and services. For example, a higher price for education or
healthcare can limit access for those with lower incomes, which can perpetuate social
and economic inequalities.

Influences government policies: Price can influence government policies, such as

regulations on minimum wage, price controls, and taxes. These policies can have a
significant impact on the availability and affordability of goods and services in a given
society.
 AUTHORITY
Authority is the power to give orders or make decisons, direct or control
someone or something. Authority is a social construct that is recognized and
accepted by individuals and groups in society, and is often linked to specific
roles, positions, or institutions.sociologists also examine the dynamics of
power and domination in social relationships. They analyze how authority
is established, maintained, and challenged, and how it shapes social
inequalities and conflicts. They also study how individuals and groups resist
or challenge authority through social movements, protests, and other forms
of collective action.
 TYPES OF AUTHORITY
Traditional authority: This type of authority is based on the long-standing customs,
traditions, and beliefs of a society. It is often associated with feudal or patriarchal societies,
where authority is derived from the inheritance of titles, positions, or privileges.

Charismatic authority: This type of authority is based on the personal qualities and
charisma of an individual, rather than on their position or title. Charismatic leaders are seen as
exceptional and inspiring, and are often able to mobilize followers around a shared vision or
cause.

Legal-rational authority: This type of authority is based on a formal system of rules and
regulations, such as laws, constitutions, or bureaucratic procedures. It is the dominant form of
authority in modern societies, where power is institutionalized and distributed through formal
organizations and legal systems.
 TRUST

Trust can be defined as a type of expectation that alleviates fear

that one’s exchange partner will act opportunistically. Trust is a
fundamental aspect of social life and is necessary for social
interaction, cooperation, and collaboration.Trust is a social
construct that is shaped by cultural norms, values, and institutions.
It can be built through repeated interactions and social relationships,
and can be influenced by factors such as communication,
reputation, and social status.
 Transaction cost theory is understood as
TRANSACTION COST alternative modes of organizing economic
transactions that minimize transaction costs.

It simply means regulation and control of

GOVERNANCE OF EXCHANGE
exchange between factors. In order to carry out
this function, there are governance structures

ECONOM IC FACTORS An individual, organization or government who

uses capital or labour for benefits.

RATIONAL DECISIONS It refers to a proces of allocating resources in order

to maximize utility by consumers and allocating
their resources to maximize profits by the
producers.
 “Price, authority, and trust: From ideal types to plural forms”,(1989)
By: J.L. Bradach & R.G. Eccles

Bradach and Eccles (1989) in their article titled “Price, authority, and
trust: From ideal types to plural forms” have focused their discussion
on three control mechanisms that govern economic transactions between
economic factors; price, authority, and trust.

There are different governance structures (called ‘control mechanisms’)

within exchange relationships. It means the economic exchanges
between economic actors are governed, regulated, and controlled by
some governances structures.
There is another governance structure called the “hybrid” that provides
intermediate forms of hierarchy that fall between these two mutually
exclusive gvernance structures; the markets and hirerarchies. We call
markets and hierarchies as mutually exclusive because they dont operate at
the same time. It means when market-mediated exchange occurs, then, the
hierarchies remain silent and vice versa.

Bradach and Eccles have provided evidence that, in contractidation, to the

traditional view of markets and hirerarchies as mutualy exclusive control
mechanisms of economic exchanges, control mechanisms; the price,
authority, and trust can operate in a combination.
 MAKE-OR-BUY
The make-or-buy (hierarchy-or-market) decisions in the
industry is based on the core assumption of the transaction
cost approach that aims to save transactions costs.

The decision to make or buy is influenced by a variety of

factors, such as the cost of production, the availability of
resources, the level of expertise required, and the potential
benefits of outsourcing.The make or buy decision can have
important implications for the organization's structure,
resource allocation, and competitiveness.
Bradach and Eccles (1989) claim: “In contrast to conventional approaches that
view market and hierarchy as mutually exclusive control mechanisms.

Here are some important points about the article:

 The article challenges the idea that economic transactions are solely
determined by the price mechanism.

 Trust and authority are not homogeneous concepts and are shaped by various
factors, including cultural norms, historical contexts, and individual
relationships.

This article highlights the critical role of social relations, particularly trust
and authority, in shaping economic behavior and provides a more
understanding of economic transactions beyond the simple price mechanism.
Bradach and Eccles explore how price mechanisms are sometimes
built into hierarchies (authority gained through legal ownership)
and how authority mechanisms often bring independent exchange
partners in a market.

This concern with the viability of the market manifests itself in the
development of social norms that monitor the behavior of traders
and the activities of the market. Eventually, these social norms
(hierarchy) of behavior ensure that the price-driven nature of the
market is maintained.
 Relationship between price and authority

Authority can influence prices by creating a perception of

legitimacy or credibility that can increase the value of goods
and services. For example, a prestigious brand or expert opinion
can command higher prices due to their perceived authority. On
the other hand, a lack of trust or authority can lead to lower
prices or even market failure.
At the same time, prices can also affect authority by shaping
perceptions of value and status. For instance, luxury goods and
high prices can create an association with exclusivity and status,
increasing the authority of those who can afford them.
 Relationship between Price, trust and
authority
In sociology, price, trust, and authority are interrelated concepts
that influence economic behavior in complex ways. While
prices are the conventional mechanism for determining the
value of goods and services, trust and authority also
significantly influence economic transactions.

Overall, the relationship between price, trust, and authority in

sociology is complex and multidimensional, with each factor
influencing the others in different ways depending on the social
norms, cultural context, and individual relationships at play.
 THANK YOU
DO YOU HAVE ANY QUESTIONS ?

Presented by:
Daniel Tamrakar

Priya Parajuli

Safalta Thapa

Shohel Tamrakar

Bhiboosha Shakya