Veiled costs, concealed incentives: Rethinking market approaches to address institutional marginalization and reduce vulnerability of artisanal fishers to power abuses in the Peruvian dolphinfish fishery

Market-based approaches play a crucial role in promoting seafood sustainability by leveraging market incentives. Typically, these incentives are commonly perceived as closely associated with premium prices or improved market access. As such, arguments around product competitiveness are used by various stakeholders to engage the lower levels of the seafood supply chain in sustainability initiatives. This study presents findings from an analysis of secondary and primary data obtained through a two-tier survey, focusing on the operational costs of Peruvian artisanal dolphinfish fleets and estimating the concealed costs that result from institutional malpractice and coercive transactions from criminal groups. Our analysis reveals that the artisanal fishing sector, due to institutional marginalization facilitated by bureaucratic overburdening, experiences various forms of power abuse. Specifically, we show how the higher the levels of informality of the fleet’s operation, the higher the probability of being subject to unethical behavior. This results in heightened hidden operational costs, which in turn affect the income of vessel owners and fishers. To address these issues, we argue that market-based approaches should build upon the new incentives offered by import-control schemes and anti-Illegal, Unreported, and Unregulated regulations, prioritizing actions to alleviate institutional marginalization of fishers. By doing so, responsible companies in the supply chain can effectively reduce legal, economic, and reputational risks while actively tackling the critical factors contributing to power imbalances and the resulting unequal distribution of benefits. • Institutional marginalization leaves fishers vulnerable to power abuse. • Power abuses affect fishers’ incomes via inducive and coercive payments. • Supply chains can help addressing root causes that enable vulnerability of fishers. • Market-based tools must prioritize tackling fishers’ institutional marginalization.