The village setting allows for the parable of the effects of greed.
Setting is instrumental to the way a people behave. Part of the setting is the culture of the people. In this tale, the setting includes Kino’s village of La Paz, Mexico. Steinbeck comments on the story’s origins.
And because the story has been told so often, it has taken root in every man's mind. And, as with all retold tales that are in people's hearts, there are only good and bad things and black and white things and good and evil things and no in-between anywhere.
The fishermen in the village are a simple people, easily swayed by the potential wealth of the pearl. They are looked down upon by the businessmen in their offices in town. Kino, unlike some of the other villagers, is not swayed by greed. He just wants to keep his family safe. The villagers are willing to try to rob him to get the pearl.
It is part of the culture of the businessmen in the town to look down on and try to take advantage of villagers. The businessmen do not see anything wrong with colluding to deprive Kino of the true worth of the pearl, and they expect him to be ignorant enough to take their lowball offers.
The setting is part of those simple fishermen. First, in their own culture that represents in canoe and songs. Second, in their behavior as ignorant people oppressed by colonists.