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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
University of Maine
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

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