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1 J. L. Econ. & Org. 385 (1985)
The Maine Lobster Market: Between Market and Hierarchy

handle is hein.journals/jleo1 and id is 391 raw text is: The Maine Lobster Market: Between Market and Hierarchy JAMES M. ACHESON University of Maine 1. INTRODUCTION Owners of firms in the Maine lobster industry exist in a complicated social milieu. They have one set of ties with firms from which they buy and to which they sell lobsters, which I call vertical ties. They have other ties with firms at the same level of the market, horizontal ties. Both, I shall argue, are necessary for economic success in the industry, although they are used for very different purposes. This paper examines how members of the lobster industry use their ties; the reasons for their evolution; and the effect of this social system on the way prices are established in the industry. The marketing system for lobsters in Maine is dominated by a large number of small, specialized firms which have developed long-term bilateral relationships. Fishermen, dealers, truckers, and wholesalers typically own their own small firms and buy and sell lobsters to each other. No vertically integrated firms have been developed which are involved in all phases of the business-from catching the lobsters to shipping them to distant markets. Yet the owners of these small firms do not act like the quintessential entrepreneur of the neoclassical model of economics, who responds only to market prices and buys and sells to the highest bidder with only economic optimization in mind. Rather, they buy and sell at the established market price to the same finite number of firms with whom they have developed ties. A fisherman ordinarily sells only to one lobster dealer; and the dealer usually sells only to a small number of pound operators, wholesalers, or other buyers. In this respect, the situation in Maine closely resembles the situation found in many other markets in the world where buyers and sellers have long-standing ties (Mintz; Geertz: 29ff.; Spoehr: 162ff; Wilson, 1980). However, there are differ- ences as well. The relationship between fishermen, dealers, and wholesalers is ambiv- alent. These people are dependent on each other, but a good deal of hostility pervades their relationships due to the ever-present threat of opportunism. It Journal of Law, Economics, and Organization vol. 1., no. 2 Fall 1985 0 1985 by Yale University. All rights reserved. ISSN 8756-6222