ECON 1465 Prof Fainmesser Deangeor Chin 3 Different Markets Prostitution Voluntary career choice Human Trafficking for sexual services Involuntary labor Escort amp Masseuse Services Breadth of sexual services is unknown ID: 145308
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Slide1
Market for Sexual Services
ECON 1465: Prof. Fainmesser
Deangeor Chin Slide2
3 Different Markets
Prostitution
Voluntary career choice
Human Trafficking for sexual services
Involuntary labor
Escort & Masseuse Services
Breadth of sexual services is unknownSlide3
Vertical Differentiation
Street walkers
:
make contact with potential customers by soliciting pedestrians or men driving by in cars
Masseuse
:
work in a massage parlor
no soliciting
Escort
:
assigned a customer by the escort services
Bar Prostitutes
:
solicit their own customers in bars
Bell Captain’s List
:
bell captain makes arrangements for hotel guests
Call Girls
:
Referral agent makes arrangements usually by telephone or prostitutes with their own lists make their own arrangements
Brothel Inmates
:
are chosen from the prostitutes present in the brothel when a customer arrives.
*Reynold, Helen. The Economics of Prostitution. 1947
Slide4
Key Definitions
John: client or demander of sexual services
Trick: sexual act or deed
Pimp: one who finds customers for prostitutes and provides protection from extortion as well as physical violence Slide5
Describing the Prostitution Market
Geographically Concentrated
In a Chicago study, half of the prostitution arrests occurred in less that 1/3 of 1% of the city blocks*
*Levitt & Vennkatesh. An Empirical Analysis of Street-Level Prostitution. 2007Slide6
Describing the Prostitution Market
Pricing
Price discrimination:
prices
(may)
vary
-across sexual acts
-across customer characteristics
-across client conditions
-across supplier powerSlide7
Describing the Prostitution Market
Regulation
There really is none
- The criminal justice system has a
MINOR
impact on prostitution services Slide8
Supply
Determined by maximization of utility
-Generally women due to reservation wages
derived from utility function of clients and workers
-Prices: 4x income otherwise
- Human Capital (education, training & health)
women have less and thus seek labor where intermittent labor market activity is not penalized, or in which skills do not deteriorate during periods of non-employments Slide9
Demand
Males are the main demanders of commercial sex
Dependent on income
A function of age
Commercial Sex may be a Giffen Good in that increased price is correlated with increased demand
Slide10
Costs & Benefits of Prostitution
Promotes violence: reduced societal utility
Police enforcement encourages prostitutes to relocate to dangerous areas
Must contract with pimps and can’t use the legal court system
May beat & kill prostitutes as a method of signaling to others
Fill the law enforcement gap… inefficiently
Moral discontent: reduces societal utility
Spread of STDs
Promotes the drug trade Slide11
Prostitution yes
or
no
Costs: violence, moral discontent, STDs, drugs, law enforcement (~11mm)
Benefits: $$$ (taxes, registration fees), feminist appreciation
In its current state, prostitution is inefficient for society as well as clients but studies show that it is no less demandedSlide12
Increasing Societal Utility
3 Options 3 Results
Increase regulation & implementation
Decriminalize
Legalize
Benefits
Costs
- Reduced violence: no geographical constraints
STDs remain
Pimp contracts will still be prevalent
Moral repugnance will still be rampant
-Reduced violence
STD testing and laws
Police enforcement
-moral repugnance Slide13
Future Research
The effect of legalization of supply and demand
The effect of legalization on the vertical differentiation within the prostitute market Slide14
References
Ahlburg, Dennis A., Jensen, Eric R. Confronting AIDS: The economics of the commercial sex industry.
Cameron, Samuel., Collins, Alan., Thew, Neill. 1999 Prostitution Services: an explanatory empirical analysis. Applied Economics, 31: 12, 1523 - 1529
Giusta, Marina et al. Sex Markets A Denied Industry. 2008
Levitt, Steven D., Venkatesh, Sudhir A. An Empirical Analysis of Street-Level Prostitution. 2007
Reynolds, Helen. The Economics of Prostitution. 1947
Warnick, Ashlie C. Sex Without Romance: The Political Economy of Prostitution. 2007Slide15
Questions