The determination of prices is a key function of markets, yet sociologists are just
beginning to study it. Most theorists view prices as a consequence of economic processes.
By contrast, we consider how social structure shapes prices. Building on embeddedness
arguments and original fieldwork at large law firms, we propose that a firm's embedded
relationships influence prices by prompting private-information flows and informal
governance arrangements that add unique value to goods and services. We test our
arguments with a separate longitudinal dataset on the pricing of legal services by
law firms that represent corporate America. We find that embeddedness can significantly
increase and decrease prices net of standard variables and in markets for both complex
and routine legal services. Moreover, results show that three forms of embeddedness—embedded
ties, board memberships, and status—affect prices in different directions and
have different magnitudes of effects that depend on the complexity of the legal service.