Quality Regulation

This chapter examines one major market failure that guilds might have helped solve: the potential for information asymmetries between producers and consumers about the quality of goods and services. Many guilds erected market regulations. To address such concerns, guilds required producers and products to be guild-certified, inspected workshops or wares, and penalized quality violations. Guilds also engaged in many unrelated activities which affected quality unintentionally. The chapter then assesses the evidence on information asymmetries about quality, the institutional mechanisms available to solve them, and the outcomes in different sectors of the European economy. It argues that guilds shed light on the balance between market failures, state failures, and the failure of particularized institutions in intermediating between producers and consumers.